Decoupling from China: Is it Possible?
There are common-sense measures that can be taken to fortify American infrastructure from Chinese control.
The post Decoupling from China: Is it Possible? appeared first on The American Conservative.
Decoupling from China: Is it Possible?
There are common-sense measures that can be taken to fortify American infrastructure from Chinese control.
The below remarks are excerpted from a speech delivered at NatCon4 in Washington, DC on July 8, 2024
Imagine waking up tomorrow in a world where America no longer calls the shots. Where our economic might has withered, our technological edge has been blunted, and our national security has been compromised. This isn’t the plot of a dystopian novel—it’s the future we’re sleepwalking into if we don’t change course.
We face a challenge that will define our generation: decoupling from China. But our greatest hurdles aren’t across the Pacific; they’re right here at home. We’re fumbling the ball through a constant series of unforced errors, and it’s high time we got our head in the game.
In many ways, I’m a living testament to both the American dream and the American nightmare. I was born in South Baltimore, and I grew up in a working-class suburb—Harford County—and to give you a quick sense of what it was like: The Fourth of July parade was one of the highlights of the year for our family. “Stars and Stripes Forever” still gives me goosebumps. We didn’t have a lot of money, but we were happy, and my mom’s insistence on education opened doors that I never even knew existed.
Fast forward, and I’ve walked the halls of Wall Street and Silicon Valley as a corporate lawyer, I’ve worked in China, studied in Russia, launched three startups, and now live with my family near Malibu. But I’ve also seen the dark side of the American experience—the forever wars that Eisenhower warned us about. As a young kid my family, like so many others, was torn apart when my father returned from Vietnam a very changed man.
This journey—from South Baltimore to the corridors of power—combined with my time at the Department of Energy has given me a fairly unique perspective on what’s at stake. And I can say with confidence that what’s at stake is nothing less than the future of American prosperity and global leadership.
Now, picture this: America’s heartland, once a symphony of bustling factories, now a quiet elegy to jobs lost and dreams destroyed. But in those broken towns lies the sleeping giant of American ingenuity. I want to talk about how we wake that giant up. I have broken it down into three broad categories of obstacles we must overcome on the path to commercial decoupling from China.
First, political blockers—exogenous ones, yes, but, frankly, mostly internal domestic ones. When challenged internally or externally with political gridlock, we have to empower our people to bust through these blockers. Second, legal—I will use the Committee on Foreign Investment in the United States (CFIUS) as an example, but the overarching point is that we have some good laws in place already that we can use, we just have to start using them. Third and finally, the enemy within—those of us ready to compete to sell the CCP the rope they will use to hang us—and those of us too worried about our own wellbeing to do anything to stop it. It’s the principal-agent problem.
Let’s start with a story that illustrates the madness we are dealing with. Imagine a piece of equipment so crucial that without it, you could not turn on the lights or charge your computer, your phone, or your car. I’m talking about large power transformers, or LPTs—the backbone of our power grid. These behemoths can weigh as much as 800,000 pounds—about the same as two Boeing 777s.
We have not really made any of these on American soil since the 1970s. Instead, we’ve largely outsourced production to China, essentially handing over the keys to our power grid to a country that has declared a “People’s War” on us. It’s insanity.
When I discovered this while working at the Department of Energy, I didn’t wait for an inter-agency meeting or propose a new 100-page, five-year study (of which we already had two!) I picked up the phone, and I called the CEO of the energy production divisions of one of the big three manufacturers.
I assumed there was some complex market-driven rational explanation for why we couldn’t make LPTs here anymore. Guess what? There isn’t. The CEO said she’d be happy to bring LPT manufacturing back to America; in fact they had already planned it out because Chinese supply chains were so inconsistent. All we would have to do is cover the cost of training our workforce to learn how to make them again. The price tag? $15 million a year for the first two or three years. I was shocked. I thought for a second her German accent was playing tricks on me—I remembered “billion” in German starts with an “M,” so I confirmed with her. Yes, she said $15 million per year for two or three years.
This is the same Department of Energy that gave $3 million to a coffee company to explore reducing the energy it uses for roasting its coffee beans. $15 million is pocket change in DC, especially compared to the high-paying jobs and radical improvement in energy security it would bring.
But here’s where it gets extra crazy. When I said, “I’m pretty sure I can come up with the money” and asked how soon we could start, she said, “After the [2020] election.” Let that sink in. A foreign company, based in a supposed ally, was playing political football with America’s energy independence, and some in our own government, including political appointees, were perfectly content to let them.
This brings me to our first action item: We need a “Made in America” mandate for all critical energy infrastructure components. No more waiting for election cycles. No more outsourcing our security. Let’s set a goal: Within four years, every large and medium power transformer on American soil is made in the USA. We control enough market demand; we can make it happen.
Now, let’s talk about legal loopholes big enough to fly not one but many Chinese spy balloons through. During my time vetting foreign acquisitions of American companies, I spotted a European firm trying to buy a U.S. energy startup. I googled them—which, by the way, I don’t think many government reviewers bother to do even basic diligence like googling these companies—and I found Chinese nationals on the board of directors of the acquiring company. So, I wrote back asking if any of these Chinese directors were members of the Chinese Communist Party.
You’d think this is a pretty straightforward question, right? Boards control companies—that’s how corporate governance works—and we were at least ostensibly supposed to be assessing the risks of foreign-controlled companies buying American assets relevant to national security.
Wrong. The American lawyers—our own people, mind you—indignantly protested saying it was “inappropriate” for me to ask about “political party” affiliation and refused to answer my question. This leads us to action item number two: We need to give teeth to many of the strictures we already have in place to defend against the commercial aspect of the Unrestricted Warfare China is prosecuting against us.
The CFIUS process is weak sauce, but let’s at least enforce “Full Disclosure.” Any foreign entity looking to acquire American companies must provide complete transparency on their leadership’s political affiliations and connections. No more hiding behind legal jargon.
But here’s the kicker—and this is where it gets personal for many of us in this room. Our most elite law firms, the ones right down the street on K Street, are being paid top dollar by Chinese interests to run circles around our government lawyers. When you’re making $175,000 a year as a govvie, and the guy across the table is pulling in $2–3 million a year as a partner at a big firm, who do you think has the upper hand? It’s not just about skill; it’s about incentives. That government lawyer is secretly (or not so secretly!) fantasizing about the big firm partner realizing he has found a diamond in the rough and offering to hire the government guy finally to get the fancy office and big salary that he is so certain he deserves.
This brings me to my final point—the enemy within. It’s essentially a “principal-agent problem,” which is really just a fancy way of saying too many people in government care more about their next job than their current one.
Here’s a real-world example. At DOE, when I asked for a simple list of foreigners working in our national labs, I hit a brick wall. Not from China, and not from the career bureaucrats, but from our own team—from the appointees. Suddenly, they needed “inter-agency cooperation” and meetings about other meetings in order to have some more meetings. Translation: “Don’t rock the boat, Dave, I’ve got a cushy private-sector job lined up after this.”
So, here’s action item number three: Let’s create a “Patriot Pledge” for all political appointees working in national security. The current ethics rules for getting private sector jobs after government service are a convoluted joke written by some of the very people who are most excited to use the loopholes that they’re putting in. Let’s keep it simple: All presidential appointees should agree to a lifetime ban to work for or on behalf of CCP-controlled firms, including Hikvision, Temu, Huawei, DJI, Tiktok, ZTE and all the others. (Yes, this would’ve applied to Tony Podesta and Loretta Lynch.)
Serve America first, now and forever, or don’t serve at all.
Now, I hear skeptics already. “It’s not that simple,” they’ll say. “The global economy is interconnected.” To that I say: It’s victory or death. This is not a game. There are no do-overs. Losing is not an option for you or your kids.
Look, we know how to win—whenever Americans decide to win, we do. But we didn’t beat the Nazis by forming committees. And we didn’t beat the Soviets with timid half-measures.
Let’s channel that American spirit once again. Here’s my modest contribution to our battle plan:
1. Revitalize American manufacturing, particularly in energy: Let’s not just bring back LPTs. Let’s identify every critical component of our energy infrastructure and within five years, produce at least 80 percent of these domestically (and get the rest from friends). Make tax and other strategic incentives for companies that reshore—and penalties for those who don’t.
2. Give teeth to our existing legal defenses, and construct effective new ones. I used CFIUS as an example. I don’t know if it was constructed as this ad hoc administrative amoeba to make it less effective or not, but why not just reciprocate how the Chinese government operates—de jure cross-border M&A deals in China are approved by MOFCOM, their Ministry of Commerce (in reality, of course, it’s the Party). Why not make it just as simple here? Direct the FTC to block any cross-border M&A that runs counter to our national interest. They’ve proven over the past three years they are experts at blocking basically all M&A. That’s actually in our national interest!
3. Cultivate patriotic public service. Besides the “Patriot Pledge,” as mentioned above, let’s create a fast-track program for successful business leaders to serve in government when they otherwise have significant reasons not to.
This would include: two-year stints; support to help with the insane amount of paperwork to get going—especially with security clearances—I got full Q in less than a month, and there is no reason it should take longer, definitely not a year or a year and a half; a clear mission; and give them backup to cut through the BS—this is especially true at the cabinet departments. If the secretaries and depsecs won’t support them, make sure the White House liaisons are willing to move aggressively against them by giving the liaisons real authority and putting people in those positions with the fortitude to use it.
I am living proof that private sector operators—who often without incentive simply would rather not—can come in, work hard to fix what’s broken, and leave.
The challenge of our time is here, and it’s an age-old enemy but with a new face: evil—and with it, enslavement of your body and your mind. This time, its champion is the Chinese Communist Party. Their goal is global authoritarianism.
To anyone who might question our commitment to freedom and liberty, I’ll just say this: We are going to win, and our grandchildren will look back on this time and say this was when America finally reclaimed her destiny.
Thank you. God bless you. And God bless the United States of America.
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