A leading advisory panel on China policy urged the US Congress on Tuesday to establish a “consolidated economic statecraft entity” to handle technological and other national security challenges posed by China’s “systematic and persistent evasion” of American export controls and sanctions.
“This recommendation addresses the critical gap between export controls and sanctions as written and their actual enforcement, recognising that China and Russia continue to successfully circumvent existing safeguards while US technological advantages erode,” the US-China Economic and Security Review Commission (USCC) said in its annual report.
“The current fragmented approach across multiple agencies dilutes accountability and prioritisation.”
The call for stronger enforcement, part of an exhaustive 733-page document, comes as the broader export-control system itself remains in flux, with Washington and Beijing locked in a tit-for-tat fight over technology and critical minerals restrictions.
During last month’s talks between US President Donald Trump and Chinese President Xi Jinping in Busan, the two agreed that Washington would pause implementation of a rule that extends export-control reach to entities owned 50 per cent or more by Chinese parties, while Beijing would pause implementation of controls on rare earths and issue licences for their export.
In recent months, the US has been locked in a fierce debate over the scope of chip export controls, pitting national security advocates of tougher restrictions to curb China’s technological rise against those warning of their economic costs.
But for years, Washington has raised concerns over the enforcement gap.
In its report, the USCC cites a Financial Times investigation estimating that more than US$1 billion worth of advanced chips produced by US-based Nvidia were smuggled into China’s black market after export controls were tightened by the Trump administration.
It also singled out China as a key partner for sanctions and export control evasion by Iran, North Korea and Russia. The commissioners stressed, in particular, the competing priorities that make enforcement difficult and the long-term nature of the challenge.
“This is an area where we know there’s going to be an enduring conflict with China … we’re going to be doing economic statecraft for at least a few more decades,” commissioner Michael Kuiken said.
“The piecemeal approach … has meant that we haven’t been able to integrate export controls and sanctions into a broader economic security policy,” said commissioner Leland Miller, noting the “inherent clashes” between those with protective mandates and those with business promotion mandates even within a single federal agency.
“There is a need at this point for these really important national security priorities to be put forward as more than a throw-in in a trade negotiation,” he continued.
According to the commission, the consolidated entity should include key agencies responsible for export control and sanctions, including the Commerce Department’s Bureau of Industry and Security (BIS), Treasury’s Office of Foreign Assets Control, the State Department’s Bureau of International Security and Nonproliferation and the Pentagon’s Defence Technology Security Administration.
Furthermore, the new unified entity should have hard enforcement powers – similar to the Treasury Department’s financial sanctions tools – so it can investigate and punish companies or individuals.
It should also be integrated into the intelligence community with “enhanced access to real-time intelligence on evasion networks” – a point that Kuiken said would represent a “fundamental” shift.
“After 9/11, there was a big push to sort of fundamentally change the way the financial sanctions community worked, and one of the big things that happened was that the Treasury Department was incorporated into the intelligence community,” he said, noting that this needed to happen with other agencies like the Commerce Department’s BIS.
The USCC, an independent panel set up by Congress in October 2000, reports to lawmakers about the national security implications of the US-China trade and economic relationship.
Tuesday’s recommendations – 28 in total – grew out of six hearings involving 50 experts from government, business and research organisations over the past year. The 12 commissioners are not lawmakers but are appointed by Congress.
Geoffrey Gertz, a senior fellow at the Centre for New American Strategy and a former director for international economics at the White House, said the new entity would still confront familiar structural limits even if Congress created it.
“Bureaucratic capacity has not really been keeping up with the need for more effective enforcement … but I don’t think you can eliminate some of those very complex trade-offs just through a bureaucratic reorganisation,” he warned.
Beyond the proposed restructuring, the commission recommended several other steps to strengthen economic security. These include strengthening screenings of new Chinese investment, directing BIS to require tracking technology on export-controlled advanced chips to detect diversion to China and other “countries of concern”, and establishing a whistle-blower programme to encourage reporting of export violations.
It also urged shifting the US export control regime on advanced chips from a “sell” model to a “rent” model by mandating that chips above a certain threshold – unless outright prohibited for export – be accessible exclusively via the cloud to limit physical diversion.
Technological competition across other domains also featured strongly in Tuesday’s report, with the commission highlighting space, quantum and biotechnology development, as well as Chinese threats to the US power grid among the top areas where Congress should act.