RAIMONDO DEFENDS EXPORT CONTROLS: Gina Raimondo over the weekend said China is “the biggest threat we’ve ever had” and that the Commerce Department’s Bureau of Industry and Security needs a bigger budget to help the United States outpace the country’s technological innovation. “We cannot let China get these chips. Period,” she said at the Reagan Defense Forum, a symposium of government and industry officials in California. That means more funding from Congress. "I have a $200 million budget. It's like the cost of a few fighter jets. Come on," Raimondo said. "Let's go fund this operation like it needs to be funded,” she added. The pitch is part of a broader strategy from Raimondo, who over the next few months plans to expand the powers of BIS, the office that keeps a blacklist of companies and organizations blocked from importing America’s most sensitive technologies. “I need to get buy-in on a strategy of a more muscular BIS from all stakeholders, including Capitol Hill, because I want input and then, later, we’ll put in a big budget ask,” Raimondo told POLITICO on Friday. Quick reminder: The Biden administration in October unveiled updated restrictions on the export of advanced chips to China, escalating an effort to slow Beijing’s development of artificial intelligence and other technologies that could assist its military. Industry clash: Groups like the Semiconductor Industry Association at the time warned “overly broad” restrictions could harm the global ecosystem, and urged the administration to get other nations like the Netherlands, Japan and South Korea to follow suit with stronger export rules of their own, so foreign companies don’t take market share from the U.S. firms. "I know there are CEOs of chip companies in this audience who were a little cranky with me when I did that, because you're losing revenue. Such is life, protecting our national security matters more than short term revenue," Raimondo said at the defense forum. “Newsflash: democracy is good for your businesses. Rule of law here and around the world is good for your businesses,” she added. Raimondo critique: The commerce secretary also singled out Nvidia Corp. in particular, which adapted chips to sell on the Chinese market after Washington imposed its initial restrictions in October 2022. "That's what industry does," she said, adding "that’s not productive." What’s next? The Republican-led House Foreign Affairs Committee is in the process of conducting a review to reform the office and could release its report as early as this week. LAWMAKERS SCRUTINIZE BIDEN’S EV GUIDANCE: The GOP chair of the House Select Committee on China slammed the Biden administration’s new rules to crack down on electric-vehicle manufacturers sourcing from China and other foreign adversaries. “Treasury’s naive new regulations would open the floodgates for American tax dollars to flow to Chinese companies complicit in trade violations and forced labor abuses,” said Rep. Mike Gallagher (R-Wisc.) in a statement. “Instead of securing critical supply chains and protecting vital American industries, Treasury’s rules will sell out American workers and increase our dependence on Communist China.” How we got here: The Biden administration rolled out rules for the electric vehicle tax credits on Friday. The rules disqualify a vehicle from receiving the credit if even one of its suppliers has loose ties to Beijing, such as producing parts in China or having as few as 25 percent of board seats controlled by China. Keep in mind: The rules also offer some flexibility that automakers had sought, including a two-year phase-in period for enforcing the rule on some difficult-to-trace battery powders that go into their EVs. Automaker groups and Senate Finance Committee member Debbie Stabenow (D-Mich.) praised the measure as a balanced approach from the administration. But moderates pile on: Sen. Joe Manchin (D-W.V.), who delivered the pivotal vote on the 2022 Inflation Reduction Act, signaled the guidance undermines the intention of the law. “This administration is, yet again, trying to find workarounds and delays that leave the door wide open for China to benefit off the backs of American taxpayers,” said Manchin. CHINA INVESTMENT DIVIDES THE GOP: House Foreign Affairs Chair Michael McCaul (R-Texas) said Friday that GOP lawmakers are aiming to reach a compromise on China investment restrictions early next year, per Jasper Goodman. The Texas Republican and other China hawks have pushed for legislation that would expand government scrutiny of U.S. investments in China and other foreign adversaries. Another faction led by House Financial Services Chair Patrick McHenry (R-N.C.) has resisted the new form of intervention in outbound investment and has instead pushed for a sanctions-based approach. The clash is poised to derail outbound investment policy from being included in this year's annual defense bill, and now Republicans are trying to figure out a way forward. McCaul said he met with McHenry and Speaker Mike Johnson and that they committed to work things out. RUBIO LEADS PUSH FOR CHINA TRAVEL BAN: Five Republican senators wrote to President Joe Biden on Friday, asking him to restrict travel to and from China after a spike in Chinese respiratory illness cases. "We should immediately restrict travel between the United States and (China) until we know more about the dangers posed by this new illness," said the letter signed by Sens. Marco Rubio, the top Republican on the Senate Intelligence Committee, as well as J.D. Vance (Ohio), Rick Scott (Fla.), Tommy Tuberville (Ala.) and Mike Braun (Ind.). U.S. LAGS BEHIND CHINA ON DEFENSE: America’s defense industry is struggling to achieve the kind of speed and responsiveness to stay ahead in a high-tech arms race with competitors such as China, an unreleased draft of a new Pentagon report on the defense industry warns, per Paul McLeary and Joe Gould.
| 
