A congressional advisory panel said yesterday that Chinese spying in the US represents the greatest threat to US technology and recommended lawmakers consider financing counterintelligence efforts meant to stop China from stealing US manufacturing expertise.
The US-China Economic and Security Review Commission also said in its annual report to Congress that small and medium US manufacturers, which represent more than half the manufacturing jobs in the US, "face the full brunt of China's unfair trade practices, including currency manipulation and illegal subsidies for Chinese exports."
Beijing's economic policies create a trade relationship that is "severely out of balance" in China's favor, said the commission, which Congress set up in 2000 to investigate and report on US-China issues.
Commission Chairperson Carolyn Bartholomew told reporters that "China's interest in moving toward a free market economy is not just stalling but is actually now reversing course."
Messages left with the Chinese embassy in Washington were not immediately returned. Chinese officials have reacted to past reports by warning against what they see as outside interference in Chinese affairs.
The report comes about a year before US presidential and congressional elections, and candidates have been critical of what they see as China's failure to live up to its responsibilities as an emerging superpower. China is often singled out for its flood of goods into the US; building a massive, secretive military; abusing its citizens' rights; and befriending rogue nations to secure sources of energy.
US officials also recognize Washington needs Beijing, a veto-holding member of the UN Security Council, to secure punishment for Iran's nuclear program and to persuade North Korea to give up its nuclear weapons.
The commission's Democratic and Republican appointees have begun meeting with congressional staff and lawmakers to discuss the report's 42 recommendations.
In the report, the commission said China's spies allow Chinese companies to get new technology "without the necessity of investing time or money to perform research."
Chinese espionage was said to be straining US counterintelligence officials and helping China's military modernization.
While the report praised China for some economic progress this year, improvements were undertaken "with great hesitancy and, even then, only with the prodding of other nations and the World Trade Organization."
China, it said, "maintains a preference for authoritarian controls over its economy" and has done too little to police widespread copyright piracy of foreign goods sold in China.
The commission also faulted China for keeping its currency artificially low. US manufacturers have complained that a low yuan makes Chinese goods cheaper in the US and US products more expensive in China.
China's dependence on coal, lack of energy efficiency and poor enforcement of environmental regulations, the report said, "are creating devastating environmental effects that extend throughout the region and beyond" to the US.
The commission said tensions between Taiwan and China have created an "emotionally charged standoff that risks armed conflict if not carefully managed by both sides. Such a conflict could involve the United States."
The US has hinted it would go to war to protect Taiwan if nuclear-armed China were to attack.