The China Hawk in Washington Rattling Corporate Boardrooms
Republican Rep. Mike Gallagher aims to counter Beijing by telling ‘American companies to act like American companies’
GREEN BAY, Wis.—To counter Beijing, one of Washington’s most vocal China hawks is taking aim at American business, looking to halt the investment and trade he says is enabling Beijing’s superpower ambitions.
Wisconsin Republican Mike Gallagher chairs a new bipartisan House committee empowered to devise strategies for the U.S. to compete against China. The congressman sees the titans of Wall Street, Hollywood, Silicon Valley, higher education and other Americans with Chinese commercial interests as behind the curve in appreciating the risks China presents.
To redress that, Gallagher is pointing his committee to examine where extensive U.S. commercial links are making China stronger and then mapping how to disentangle them.
In recent months, he has charged that Apple’s supply chain is dangerously exposed to China, that Walt Disney has undermined U.S. values by editing films to appease Beijing’s censors and, as some activists allege, that Nike may have used cotton produced with forced labor.
A former Marine Corps intelligence officer with a Ph.D. in Cold War policy-making, Gallagher hammers on a view that China’s ruling Communist Party manages an “Orwellian techno-totalitarian surveillance state” determined to render the U.S. a subordinate power. He warns that Chinese leader Xi Jinping is on a war footing, and the U.S. must position itself for what he calls “an existential struggle over what life will look like in the 21st century.”
“We want American companies to act like American companies,” Gallagher says.
Disney has said it won’t compromise storytelling to abide by rules in different nations, while Apple has taken steps to diversify production into places such as India. A policy statement on Nike’s website says the company supports efforts to end forced labor and works to “identify and address risks in our supply chain.”
Not long ago, Washington and Beijing agreed that deeper business ties reinforced stability. Gallagher calls such thinking naive. While not advocating a full severing of ties, he proposes a pullback that would fundamentally redefine the globally critical U.S.-China relationship, say his fellow members of Congress, their aides and China specialists.
American holdings of stocks and bonds in China were valued at $1.2 trillion in 2020, the research firm Rhodium Group estimates, on top of hundreds of billions of dollars worth of factories, real estate and other assets. Two-way trade last year touched nearly $700 billion, including dairy and mink exported to China from Gallagher’s district which includes Green Bay. China also holds more than $850 billion in U.S. Treasury securities.
Undoing that, in Gallagher’s vision, means getting Silicon Valley to curb funding for China’s tech sector, Wall Street fund managers to sell Chinese stocks and manufacturers to enforce American standards in their supply lines.
Gallagher’s approach has rattled business executives who charge that it lacks nuance and worry the committee’s spotlight risks damaging profitable businesses and the global economy.
“Nobody wants to be in the crosshairs,” says the head of a U.S. organization that favors China engagement.
Gallagher’s growing influence on China policy stems from uncharacteristic unity in Washington between Republicans and Democrats to confront Beijing. Formally called the “Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party,” his panel lacks lawmaking authority. But it has subpoena power and, as an important sounding board in Congress for all things China, it gives Gallagher sway with committees that craft legislation.
A priority he has set for the committee is trying to speed up weapons deliveries to Taiwan to deter military threats to the island democracy from China. Committee hearings, held in prime time, have focused on the Communist Party, its repression of human rights and, last Wednesday, its use of economic and regulatory pressure to disadvantage foreign companies and obtain proprietary technology.
“What I want these businesses to be aware of, and that ranges from a Wisconsin company to Apple to Disney, is you have to take seriously the prospect of Xi Jinping invading Taiwan, and in that scenario the bottom falls out of the economic relationship, unless we totally surrender,” says Gallagher. Recently, the committee participated in a Taiwan wargame that estimated economic losses in the trillions of dollars, even if Beijing limits its actions to a blockade.
Having never set foot in China or even much focused on it until recent years, Gallagher says he isn’t an expert. He says a sober assessment of the evidence demonstrates that decades of U.S. investment and diplomacy with Beijing failed to create a viable working relationship and instead enabled what he regards as America’s greatest adversary.
“Yes, a lot of people have been able to make a lot of money but things have gotten much worse geopolitically for America,” Gallagher says.
After calling on Disney Chief Executive Robert Iger in California on a committee trip to California last month, Gallagher cast doubt on a Hollywood view that moviemaking generates goodwill toward the U.S. “What is the evidence that it is improving our geopolitical position relative to the CCP?” he asked.
As for Apple, Gallagher said after meeting CEO Tim Cook, the iPhone maker epitomizes the challenge of “how we disentangle ourselves from this complex economic relationship with China so we are not dependent on the largess of an increasingly hostile regime without shooting ourselves in the foot economically.”
At a U.S. Chamber of Commerce conference in Washington this month, a discussion moderator asked Gallagher and the committee’s top Democrat, Rep. Raja Krishnamoorthi of Illinois, if they planned to call businesses before their panel.
“We can have intense debates about our policy vis-à-vis China going forward,” Gallagher said, acknowledging the alarm in the business community. He then said, “Companies should be prepared to defend their investment strategy in China, their manufacturing presence in China.”
A New York corporate strategist who deals with multinational companies says he has felt like a bartender listening to executives express anxiety they might fall under Gallagher’s gaze.
Adam Kovacevich, chief executive of McLean, Va.-based trade group Chamber of Progress, which represents major Silicon Valley companies, says Gallagher has an opportunity to help or hurt American firms. “Is he trying to shame companies, or is he actually trying to reduce economic dependency on China?” asks Kovacevich.
So far, Gallagher hasn’t forced public showdowns with American executives and instead has met many behind closed doors.
“My goal is not to have some sort of bomb-throwing viral moment,” he says. “I want to engage in a serious discussion about the complexities of selective, economic decoupling or de-risking.”
Detractors of Gallagher’s committee say the panel’s determined approach risks fueling bias against Asian-Americans or preordaining a military clash between superpowers—outcomes Gallagher says are both high priorities to avoid.
The criticisms remind Gallagher of Wisconsin Republican Sen. Joseph McCarthy, who unsettled 1950s America in his pursuit of communist “enemies from within,” and is buried in Gallagher’s district. A “dubious legacy,” Gallagher says.
Now in his fourth term in Congress, Gallagher is regarded as thoughtful by supporters and critics in the House.
“He’s a very serious legislator,” says House Speaker Kevin McCarthy (R., Calif.). He chose the now 39-year-old Gallagher to become the youngest committee chairman in Congress for his Marines intelligence background and experience on the House Armed Services Committee.
For years, Gallagher viewed the Middle East as the pre-eminent U.S. security challenge, based on his deployments to Iraq a decade and a half ago and on his work later as a staff member at the Senate Foreign Relations Committee. He speaks Arabic, which he studied at Princeton University.
A dark view of Beijing crystallized for Gallagher after the U.S. Office of Personnel Management in 2015 told more than 21 million Americans, including him, that suspected Chinese hackers had stolen personal information contained in government background records.
“That was just the most prominent incident in an accumulation of things that convinced me I need to be paying more attention to China,” he says. At the time, it struck him as incongruous that the Obama White House was planning to honor China’s Xi with a state visit.
Gallagher turned to friends he considers authorities, especially a Chinese-speaking fellow Marine he had served alongside in Iraq, Matt Pottinger. The pair kept up a dialogue over breakfasts as Pottinger later charted a hard-line approach to China as deputy national security adviser in the Trump White House and Gallagher in 2016 got elected to Congress.
“We’ve just had a long, open-ended conversation that’s lasted a decade and a half about the Middle East, Asia and the world,” says Pottinger, who also previously reported for The Wall Street Journal in China. He called Gallagher a “serious student of history” who will “have an outsized impact on national security policy.”
Gallagher’s congressional district is centered on his hometown, Green Bay, where the family name is associated with a pizza chain once owned by his father, an obstetrician.
The area boasts little investment from China, though it is still a presence. Local shipyard Fincantieri Marinette Marine, which has made donations to Gallagher’s campaigns, is adding hundreds of jobs since securing Navy contracts to build a new class of guided missile frigate designed for deployment near China.
On a visit to his district earlier this month, Gallagher donned a white plastic coverall at a mink farm and heard how the fur industry relies on China as a market and vaccine producer.
Being effective against Beijing, he says, hinges on places like northeast Wisconsin. “If you haven’t explained the stakes, then how are you going to generate support for the actions necessary, actions that may actually be costly?” Gallagher says.
Siobhan Hughes contributed to this article.
Write to James T. Areddy at James.Areddy@wsj.com
Corrections & Amplifications
Rep Mike Gallagher is in his fourth term. An earlier version of this article incorrectly said he is in this third term. (May 20)