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    American Firms Invested $1 Billion in Chinese Chips, Lawmakers Find

    A congressional investigation determined that U.S. funding helped fuel the growth of a sector now viewed by Washington as a security threat.A congressional investigation has determined that five American venture capital firms invested more than $1 billion in China’s semiconductor industry since 2001, fueling the growth of a sector that the United States government now regards as a national security threat.Funds supplied by the five firms — GGV Capital, GSR Ventures, Qualcomm Ventures, Sequoia Capital and Walden International — went to more than 150 Chinese companies, according to the report, which was released Thursday by both Republicans and Democrats on the House Select Committee on the Chinese Communist Party.The investments included roughly $180 million that went to Chinese firms that the committee said directly or indirectly supported Beijing’s military. That includes companies that the U.S. government has said provide chips for China’s military research, equipment and weapons, such as Semiconductor Manufacturing International Corporation, or SMIC, China’s largest chipmaker.The report by the House committee focuses on investments made before the Biden administration imposed sweeping restrictions aimed at cutting off China’s access to American financing. It does not allege any illegality.In August, the Biden administration barred U.S. venture capital and private equity firms from investing in Chinese quantum computing, artificial intelligence and advanced semiconductors. It has also imposed worldwide limits on sales of advanced chips and chip-making machines to China, arguing that these technologies could help advance the capabilities of the Chinese military and spy agencies.Since it was established a year ago, the committee has called for raising tariffs on China, targeted Ford Motor and others for doing business with Chinese companies, and spotlighted forced labor concerns involving Chinese shopping sites.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    For First Time in Two Decades, U.S. Buys More From Mexico Than China

    The United States bought more goods from Mexico than China in 2023 for the first time in 20 years, evidence of how much global trade patterns have shifted.In the depths of the pandemic, as global supply chains buckled and the cost of shipping a container from China soared nearly twentyfold, Marco Villarreal spied an opportunity.In 2021, Mr. Villarreal resigned as Caterpillar’s director general in Mexico and began nurturing ties with companies looking to shift manufacturing from China to Mexico. He found a client in Hisun, a Chinese producer of all-terrain vehicles, which hired Mr. Villarreal to establish a $152 million manufacturing site in Saltillo, an industrial hub in northern Mexico.Mr. Villarreal said foreign companies, particularly those seeking to sell within North America, saw Mexico as a viable alternative to China for several reasons, including the simmering trade tensions between the United States and China.“The stars are aligning for Mexico,” he said.New data released on Wednesday showed that Mexico outpaced China for the first time in 20 years to become America’s top source of official imports — a significant shift that highlights how increased tensions between Washington and Beijing are altering trade flows.The United States’ trade deficit with China narrowed significantly last year, with goods imports from the country dropping 20 percent to $427.2 billion, the data shows. American consumers and businesses turned to Mexico, Europe, South Korea, India, Canada and Vietnam for auto parts, shoes, toys and raw materials.Imports from China fell last yearU.S. imports of goods by origin

    Sources: U.S. Census Bureau; U.S. Bureau of Economic AnalysisBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Trump’s Tariffs Hurt U.S. Jobs but Swayed American Voters, Study Says

    New research finds that former President Donald J. Trump’s tariffs did not bring back U.S. jobs, but voters appeared to reward him for the levies anyway.The sweeping tariffs that former President Donald J. Trump imposed on China and other American trading partners were simultaneously a political success and an economic failure, a new study suggests. That’s because the levies won over voters for the Republican Party even though they did not bring back jobs.The nonpartisan working paper examines monthly data on U.S. employment by industry to find that the tariffs that Mr. Trump placed on foreign metals, washing machines and an array of goods from China starting in 2018 neither raised nor lowered the overall number of jobs in the affected industries.But the tariffs did incite other countries to impose their own retaliatory tariffs on American products, making them more expensive to sell overseas, and those levies had a negative effect on American jobs, the paper finds. That was particularly true in agriculture: Farmers who exported soybeans, cotton and sorghum to China were hit by Beijing’s decision to raise tariffs on those products to as much as 25 percent.The Trump administration aimed to offset those losses by offering financial support for farmers, ultimately giving out $23 billion in 2018 and 2019. But those funds were distributed unevenly, a government assessment found, and the economists say those subsidies only partially mitigated the harm that had been caused by the tariffs.The findings contradict Mr. Trump’s claims that his tariffs helped to reverse some of the damage done by competition from China and bring back American manufacturing jobs that had gone overseas. The economists conclude that the aggregate effect on U.S. jobs of the three measures — the original tariffs, retaliatory tariffs and subsidies granted to farmers — were “at best a wash, and it may have been mildly negative.”“Certainly you can reject the hypothesis that this tariff policy was very successful at bringing back jobs to those industries that got a lot of exposure to that tariff war,” one of the study authors, David Dorn of the University of Zurich, said in an interview.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Flush With Investment, New U.S. Factories Face a Familiar Challenge

    Worries are growing in Washington that a flood of Chinese products could put new American investments in clean energy and high-tech factories at risk.The Biden administration has begun pumping more than $2 trillion into U.S. factories and infrastructure, investing huge sums to try to strengthen American industry and fight climate change.But the effort is facing a familiar threat: a surge of low-priced products from China. That is drawing the attention of President Biden and his aides, who are considering new protectionist measures to make sure American industry can compete against Beijing.As U.S. factories spin up to produce electric vehicles, semiconductors and solar panels, China is flooding the market with similar goods, often at significantly lower prices than American competitors. A similar influx is also hitting the European market.American executives and officials argue that China’s actions violate global trade rules. The concerns are spurring new calls in America and Europe for higher tariffs on Chinese imports, potentially escalating what is already a contentious economic relationship between China and the West.The Chinese imports mirror a surge that undercut the Obama administration’s efforts to seed domestic solar manufacturing after the 2008 financial crisis and drove some American start-ups out of business. The administration retaliated with tariffs on solar equipment from China, sparking a dispute at the World Trade Organization.Some Biden officials are concerned that Chinese products could once again threaten the survival of U.S. factories at a moment when the government is spending huge sums to jump-start domestic manufacturing. Administration officials appear likely to raise tariffs on electric vehicles and other strategic goods from China, as part of a review of the levies former President Donald J. Trump imposed on China four years ago, according to people familiar with the matter. That review, which has been underway since Mr. Biden took office, could finally conclude in the next few months.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber?  More

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    World Bank Warns of Energy Price Surge if Mideast War Spreads

    A new economic report predicted a year of weak growth and said the world faced a decade of “wasted opportunity.”The global economy is at risk of a “wasted” decade and the weakest stretch of growth in 30 years, the World Bank warned on Tuesday, saying a sluggish recovery from the pandemic and crippling wars in Ukraine and the Middle East are expected to weigh heavily on output.In its semiannual Global Economic Prospects report, the World Bank projected that the growth in world output will slow further in 2024, declining to 2.4 percent from 2.6 percent. Although the global economy has been surprisingly resilient, the report warned that its forecasts were subject to heightened uncertainty because of the two wars, a diminished Chinese economy and the increasing risks of natural disasters caused by global warming.The converging crises in recent years have put the world economy on track for the weakest half-decade in 30 years.“Without a major course correction, the 2020s will go down as a decade of wasted opportunity,” said Indermit Gill, the World Bank Group’s chief economist.Global growth is projected to slow for the third straight year in 2024. Developing countries are bearing the brunt of the slowdown, with high borrowing costs and anemic trade volumes weighing on their economies.Although policymakers have made progress in bringing inflation down from its 2022 high, the war in Gaza between Israel and Hamas is threatening to become a broader conflict that could spur a new bout of price increases by causing the cost of oil and food to spike.“The recent conflict in the Middle East, coming on top of the Russian Federation’s invasion of Ukraine, has heightened geopolitical risks,” the report said. “Conflict escalation could lead to surging energy prices, with broader implications for global activity and inflation.”The recent drone and missile attacks in the Red Sea by the Iranian-backed Houthi militia have already affected international commerce by pushing up oil prices and freight and insurance rates while diverting maritime traffic to a much longer and costlier route around Africa.Economists at Capital Economics wrote in a report this month that the redirecting of trade ships away from the Red Sea is unlikely to lead to a resurgence of global inflation, but they suggested that if the war became a broader regional conflict it could pose inflationary risks.The disruptions to shipping routes follow a year in which, other than during worldwide recessions, global trade growth was the slowest in the past 50 years, according to the World Bank.If the conflict in the Middle East does not widen, the World Bank expects that global oil prices will edge lower this year as growth weakens and production of oil increases.Beyond the ongoing wars, signs of fragility in the Chinese economy also remain a worry. World Bank economists pointed to lingering weakness in China’s property sector and lackluster consumer spending as evidence that the world’s second-largest economy will continue to underperform this year. They suggested that could pose headwinds for some of China’s trading partners in Asia.Chinese growth is expected to slow to 4.5 percent this year from 5.2 percent in 2023. Outside the pandemic-induced downturn, that would be China’s slowest expansion in 30 years.Europe and the United States are also poised for another year of weak output in 2024.The World Bank projects that economic growth in the euro area will rise to 0.7 percent in 2024 from 0.4 percent in 2023. Despite easing inflation and rising wages, tight credit conditions are expected to constrain economic activity.Growth in the United States is expected to slow to 1.6 percent this year from 2.5 percent in 2023. The World Bank attributes the slowdown to elevated interest rates — which are at their highest level in 22 years — and a pullback in government spending. Businesses are expected to be cautious about investing because of economic and political uncertainty, including around the 2024 election.Despite such slow growth, Biden administration officials say they deserve credit for corralling inflation while keeping the economy afloat.“I think we’ve made tremendous progress,” Treasury Secretary Janet L. Yellen told reporters on Monday. “It’s very unusual to have a period in which inflation declines as much it has while the labor market remains strong.”She added: “But that’s what we’re seeing, and that’s why I say we’re enjoying a soft landing.” More

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    The Debt Problem Is Enormous, and the System for Fixing It Is Broken

    Economists offer alternatives to financial safeguards created when the U.S. was the pre-eminent superpower and climate change wasn’t on the agenda.Martin Guzman was a college freshman at La Universidad Nacional de La Plata, Argentina, in 2001 when a debt crisis prompted default, riots and a devastating depression. A dazed middle class suffered ruin, as the International Monetary Fund insisted that the government make misery-inducing budget cuts in exchange for a bailout.Watching Argentina unravel inspired Mr. Guzman to switch majors and study economics. Nearly two decades later, when the government was again bankrupt, it was Mr. Guzman as finance minister who negotiated with I.M.F. officials to restructure a $44 billion debt, the result of an earlier ill-conceived bailout.Today he is one of a number of prominent economists and world leaders who argue that the ambitious framework created at the end of World War II to safeguard economic growth and stability, with the I.M.F. and World Bank as its pillars, is failing in its mission.Martin Guzman, a former finance minister in Argentina, is among the economists and world leaders who argue that the framework created at the end of World War II to safeguard economic growth and stability is not working.Nathalia Angarita for The New York TimesJavier Milei, the newly elected president of Argentina, at an election event in Salta, Argentina, in October. He has described himself as an “anarcho-capitalist.”Sarah Pabst for The New York TimesThe current system “contributes to a more inequitable and unstable global economy,” said Mr. Guzman, who resigned last year after a rift within the government.The repayment that Mr. Guzman negotiated was the 22nd arrangement between Argentina and the I.M.F. Even so, the country’s economic tailspin has only increased with an annual inflation rate of more than 140 percent, growing lines at soup kitchens and a new, self-proclaimed “anarcho-capitalist” president, Javier Milei, who this week devalued the currency by 50 percent.The I.M.F. and World Bank have aroused complaints from the left and right ever since they were created. But the latest critiques pose a more profound question: Does the economic framework devised eight decades ago fit the economy that exists today, when new geopolitical conflicts collide with established economic relationships and climate change poses an imminent threat?Volunteers serving free meals in Buenos Aires. Argentina’s economy is in a tailspin, with growing lines at soup kitchens.Rodrigo Abd/Associated PressProtests in Buenos Aires in 2001. A debt crisis in Argentina led to default, riots and a devastating depression.Fabian Gredillas/Agence France-Presse — Getty ImagesThis 21st-century clash of ideas about how to fix a system created for a 20th-century world is one of the most consequential facing the global economy.The I.M.F. was set up in 1944 at a conference in Bretton Woods, N.H., to help rescue countries in financial distress, while the World Bank’s focus was reducing poverty and investing in social development. The United States was the pre-eminent economic superpower, and scores of developing nations in Africa and Asia had not yet gained independence. The foundational ideology — later known as the “Washington Consensus” — held that prosperity depended on unhindered trade, deregulation and the primacy of private investment.“Nearly 80 years later, the global financial architecture is outdated, dysfunctional and unjust,” António Guterres, secretary general of the United Nations, said this summer at a summit in Paris. “Even the most fundamental goals on hunger and poverty have gone into reverse after decades of progress.”The world today is geopolitically fragmented. More than three-quarters of the current I.M.F. and World Bank countries were not at Bretton Woods. China’s economy, in ruins at the end of World War II, is now the world’s second-largest, an engine of global growth and a crucial hub in the world’s industrial machine and supply chain. India, then still a British colony, is one of the top five economies in the world.A session of the United Nations Monetary Conference in Bretton Woods, N.H., on July 4, 1944. Delegates from 44 countries are seated at the long tables.Abe Fox/Associated Press, via Associated PressAntónio Guterres, secretary general of the United Nations, said this summer that “the global financial architecture is outdated, dysfunctional, and unjust.”Martin Divisek/EPA, via ShutterstockThe once vaunted “Washington Consensus” has fallen into disrepute, with a greater recognition of how inequality and bias against women hamper growth, as well as the need for collective action on the climate.The mismatch between institution and mission has sharpened in recent years. Pounded by the Covid-19 pandemic, spiking food and energy prices related to the war in Ukraine, and higher interest rates, low- and middle-income countries are swimming in debt and facing slow growth. The size of the global economy as well as the scope of the problems have grown immensely, but funding of the I.M.F. and World Bank has not kept pace.Resolving debt crises is also vastly more complicated now that China and legions of private creditors are involved, instead of just a handful of Western banks.The World’s Bank’s own analyses outline the extent of the economic problems. “For the poorest countries, debt has become a nearly paralyzing burden,” a report released Wednesday concluded. Countries are forced to spend money on interest payments instead of investing in public health, education and the environment.An assembly line at the electric vehicle manufacturer Nio in Hefei, China. China’s economy was in ruins at the end of World War II but is now the world’s second largest and an engine of global growth.Qilai Shen for The New York TimesGita Gopinath, first deputy managing director of the International Monetary Fund, said of the current financial system, “We have countries strategically competing with amorphous rules and without an effective referee.”Jalal Morchidi/EPA, via ShutterstockAnd that debt doesn’t account for the trillions of dollars that developing countries will need to mitigate the ravages of climate change.Then there are the tensions between the United States and China, and Russia and Europe and its allies. It is harder to resolve debt crises or finance major infrastructure without bumping up against security concerns — like when the World Bank awarded the Chinese telecommunications giant Huawei a contract that turned out to violate U.S. sanctions policy, or when China has resisted debt restructuring agreements.“The global rules-based system was not built to resolve national security-based trade conflicts,” Gita Gopinath, first deputy managing director of the I.M.F., said Monday in a speech to the International Economic Association in Colombia. “We have countries strategically competing with amorphous rules and without an effective referee.”The World Bank and I.M.F. have made changes. The fund has moderated its approach to bailouts, replacing austerity with the idea of sustainable debt. The bank this year significantly increased the share of money going to climate-related projects. But critics maintain that the fixes so far are insufficient.“The way in which they have evolved and adapted is much slower than the way the global economy evolved and adapted,” Mr. Guzman said.Argentina’s new president devalued the currency by 50 percent this week.Sarah Pabst for The New York TimesA vegetables shop in Almagro in Buenos Aires. Argentina’s economy is South America’s second largest.Anita Pouchard Serra for The New York Times‘Time to Revisit Bretton Woods’Argentina, South America’s second-largest economy, may be the global economic system’s most notorious repeat failure, but it was Barbados, a tiny island nation in the Caribbean, that can be credited with turbocharging momentum for change.Mia Mottley, the prime minister, spoke out two years ago at the climate change summit in Glasgow and then followed up with the Bridgetown Initiative, a proposal to overhaul the way rich countries help poor countries adapt to climate change and avoid crippling debt.“Yes, it is time for us to revisit Bretton Woods,” she said in a speech at last year’s climate summit in Egypt. Ms. Mottley argues that there has been a “fundamental breakdown” in a longstanding covenant between poor countries and rich ones, many of which built their wealth by exploiting former colonies. The most advanced industrialized countries also produce most of the emissions that are heating the planet and causing extreme floods, wildfires and droughts in poor countries.Mavis Owusu-Gyamfi, the executive vice president of the African Center for Economic Transformation, in Ghana, said that even recent agreements to deal with debt like the 2020 Common Framework were created without input from developing nations.“We are calling for a voice and seat at the table,” Ms. Owusu-Gyamfi said, from her office in Accra, as she discussed a $3 billion I.M.F. bailout of Ghana.Yet if the fund and bank are focused on economic issues, they are essentially political creations that reflect the power of the countries that established, finance and manage them.And those countries are reluctant to cede that power. The United States, the only member with veto power, has the largest share of votes in part because of the size of its economy and financial contributions. It does not want to see its influence shrink and others’ — particularly China’s — grow.The impasse over reapportioning votes has hampered efforts to increase funding levels, which countries across the board agree need to be increased.A vegetable market in Accra, Ghana. “We are calling for a voice and seat at the table,” said Mavis Owusu-Gyamfi, the executive vice president of the African Center for Economic Transformation in Ghana.Natalija Gormalova for The New York TimesCustomers at lunch in Buenos Aires. Mr. Guzman and others pushing for change argue that indebted countries need more grants and low-interest loans with long repayment timelines.Sarah Pabst for The New York Times‘Big Hole’ in How to Deal With DebtStill, as Mr. Guzman said, “even if there are no changes in governance, there could be changes in policies.”Emerging nations need enormous amounts of money to invest in public health, education, transport and climate resilience. But they are saddled with high borrowing costs because of the market’s often exaggerated perception of the risk they pose as borrowers.And because they are usually compelled to borrow in dollars or euros, their payments soar if the Federal Reserve and other central banks raise interest rates to combat inflation as they did in the 1980s and after the Covid pandemic.The proliferation of private lenders and variety of loan agreements have made debt negotiations impossibly complex, yet no international legal arbiter exists.Zambia defaulted on its external debt three years ago, and there is still no agreement because the I.M.F., China and bondholders are at odds.There’s a “big hole” in international governance when it comes to sovereign debt, said Paola Subacchi, an economist at the Global Policy Institute at Queen Mary University in London, because the rules don’t apply to private loans, whether from a hedge fund or China’s central bank. Often these creditors have an interest in drawing out the process to hold out for a better deal.Mr. Guzman and other economists have called for an international legal arbiter to adjudicate disputes related to sovereign debt.“Every country has adopted a bankruptcy law,” said Joseph Stiglitz, a former chief economist at the World Bank, “but internationally we don’t have one.”The United States, though, has repeatedly opposed the idea, saying it is unnecessary.Rescues, too, have proved to be problematic. Last-resort loans from the I.M.F. can end up adding to a country’s budgetary woes and undermining the economic recovery because interest rates are so high now, and borrowers must also pay hefty fees.Those like Mr. Guzman and Ms. Mottley pushing for change argue that indebted countries need significantly more grants and low-interest loans with long repayment timelines, along with a slate of other reforms.“The challenges are different today,” said Mr. Guzman. “Policies need to be better aligned with the mission.”Mia Mottley, the prime minister of Barbados, offered a proposal this year to overhaul the way rich countries help poor countries adapt to climate change and avoid crippling debt.Sean Gallup/Getty ImagesFlash flooding in Bangladesh last year. The global economic framework was devised long before climate change posed an imminent threat to poor nations.Mushfiqul Alam/NurPhoto More

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    World Bank Warns Record Debt Burdens Haunt Developing Economies

    Surging interest rates and waning financing options threaten a “lost decade” for poor countries.Surging interest rates are saddling the world’s poorest countries with record levels of debt and complicating investments in public health, education and infrastructure initiatives that are key to helping their populations emerge from poverty, the World Bank warned on Wednesday.In its latest report on international debt, the World Bank said that low- and middle-income countries had paid $443.5 billion toward principal and interest in 2022. That is the highest level in history and a 5 percent increase from 2021. The organization projected that total would rise by nearly 40 percent in 2023 and 2024. The bank estimated that more than half of the world’s low-income countries were facing debt distress and called for their obligations to be restructured to avoid a “lost decade.”“Record debt levels and high interest rates have set many countries on a path to crisis,” said Indermit Gill, the World Bank Group’s chief economist.The World Bank pointed to the variable interest rates on the debt that many developing countries owe and are struggling to repay as a looming threat to their solvency. The bank also noted that the stronger U.S. dollar, which has made those countries’ currencies worth less on global markets, has been making repayment more costly.Governments have defaulted on their debts 18 times in the last three years, including in places like Zambia, Sri Lanka and Lebanon. That surpasses the total number of defaults that were recorded in the previous two decades, underscoring how unsustainable debt burdens have become.The predicament has also made it more difficult for developing countries to attract new investment and financing. According to the World Bank, new loan commitments to developing countries declined by 23 percent last year to $371 billion. It was the first time since 2015 that private creditors had received more money than they invested in developing countries.The mounting debt burdens have put additional pressure on multilateral development institutions such as the World Bank to provide low-cost loans to poor countries. International coalitions such as the Group of 20 have also been pushing to accelerate debt relief, but those efforts have been moving slowly.China, the world’s largest creditor, has faced criticism for being an obstacle to debt restructuring agreements because of its reluctance to assume losses on its loans. Earlier this year, China reached an agreement in principle with Zambia to restructure $4 billion in debt, but the deal has not been finalized amid lingering objections about concessions from some of its creditors.Sri Lanka, which declared bankruptcy last year, is also working on a restructuring package with creditors including China, Japan and India.With rich countries facing their own high debt burdens and global economic growth remaining sluggish, relief for developing economies could continue to be elusive.Treasury Secretary Janet L. Yellen said at a Wall Street Journal CEO Council event on Wednesday that debt relief was one of the most important issues that the U.S. and China needed to work together to address, and that it was a regular subject of discussion with her Chinese counterparts.“A lot of countries around the world are really suffering, especially with high interest rates from unsustainable debt burdens,” Ms. Yellen said. “They need to restructure their debt and we need to cooperate to do it.” More

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    Lawmakers Call for Raising Tariffs and Severing Economic Ties With China

    A bipartisan report recommended stripping China of the low tariffs the United States granted it two decades ago, among other actions.Bipartisan lawmakers on Tuesday called for severing more of America’s economic and financial ties with China, including revoking the low tariff rates that the United States granted Beijing after it joined the World Trade Organization more than two decades ago.The House Select Committee on the Chinese Communist Party released a wide-ranging set of recommendations for resetting America’s economic relationship with China. The report, which was signed by both House Democrats and Republicans, argued that China had carried out a “multidecade campaign of economic aggression” that had undercut American firms, dominated crucial global industries and left the United States highly vulnerable in the event of a broader military conflict.The 53-page report included nearly 150 recommendations that Congress and the administration could take to offset those vulnerabilities. They ranged from imposing new tariffs on older types of Chinese chips to further cutting off the flow of capital and technology between the world’s largest economies.Among the report’s other recommendations were requiring that publicly traded American companies disclose ties to China and investing further in U.S. research and manufacturing capacity to counter China’s dominance of sectors like pharmaceuticals and critical minerals. It also suggested developing plans to coordinate economically with allies if the Chinese government invades Taiwan.Many of the recommendations may never be adopted by a fractious Congress. But the report could provide a path toward some bipartisan legislation on China in the months to come.Representative Mike Gallagher, Republican of Wisconsin and the committee’s chairman, said in an interview that he would like to see Congress come together on a major China bill next year ahead of the presidential election. He said that while some American firms opposed restrictions on doing business with China — a large and growing market — legislation clarifying what was allowed would be beneficial for many companies.“If Congress doesn’t step up and do something legislatively,” Mr. Gallagher said, “we’re just going to bounce back and forth between different executive orders that have wildly different rules that create chaos for Wall Street and the market.”The report is a tangible sign of how much the bipartisan consensus toward China has shifted in recent years.The most prevalent argument a decade ago was that economic interdependence between the United States and China would be a force for peace and stability. Some — including Biden administration officials — still say that business ties can help stabilize the relationship and promote peace.But that theory has increasingly given way to fears that ties to China could be weaponized in the event of a conflict. It could be catastrophic for the U.S. economy or the military, for example, if the Chinese government cut off its shipments to the United States of pharmaceuticals, minerals or components for weapons systems.Beijing’s subsidization of Chinese firms and incidents of intellectual property theft have also become an increasing source of friction. In some cases, China has allowed foreign firms to operate in the country only if they form partnerships that transfer valuable technology to local companies.The report said that the United States had never before faced a geopolitical adversary with which it was so economically interconnected, and that the full extent of the risk of relying on a strategic competitor remained unknown. The country lacks a contingency plan in the case of further conflict, it said.“Addressing this novel contest will require a fundamental re-evaluation of U.S. policy towards economic engagement with the P.R.C. as well as new tools to address the P.R.C.’s campaign of economic aggression,” the report said, using the abbreviation for the People’s Republic of China.This year, the committee hosted a tabletop exercise to simulate how the United States would respond if the Chinese government invaded Taiwan. It found that U.S. efforts to deter China through sanctions and financial punishment “could carry tremendous costs to the United States,” the report said.The lawmakers said that they did not advocate a full “decoupling” of the U.S. and Chinese economies, but that the country needed to find a way to reduce Beijing’s leverage and to make the United States more economically independent.The report includes a variety of other recommendations, including increasing the authority of a committee that reviews foreign investments for national security threats and devising new high-standard trade agreements, especially with Taiwan, Japan and Britain.But the report’s first recommendation, and perhaps its most significant, is phasing in a new set of tariffs for China over a short period of time.When China joined the World Trade Organization in 2001, the United States and other members began offering China lower tariffs to encourage trade. In return, China started undertaking a series of reforms to bring its economy in line with the organization’s rules.But the report argued that China had consistently failed to make good on those promised reforms, and that the “permanent normal trade relations” the United States had granted to China after its W.T.O. succession did not lead to the benefits or economic reforms Congress had expected. The report said Congress should now apply a different, higher set of tariffs to China.Such a move has been debated by lawmakers, and has been backed by former President Donald J. Trump and other Republican candidates. Last year, Congress voted to revoke permanent normal trade relations with Russia after its invasion of Ukraine.But increasing tariffs on China, one of the United States’ largest trading partners, would provoke more opposition from businesses, since it would raise costs for products imported from China and most likely slow economic growth.The United States already has significant tariffs on many Chinese products, which were imposed during the Trump administration’s trade war and President Biden is still reviewing. The further changes suggested by Congress would increase levies on other items, like toys and smartphones, that have not born additional taxes.A study published by Oxford Economics in November and commissioned by the U.S. China Business Council estimated that such tariffs alone would lead to a $1.6 trillion loss for the U.S. economy over a five-year horizon. It would also be likely to cause further friction at the World Trade Organization, where the group’s most steadfast supporters have already accused the United States of undermining its rules.Liu Pengyu, a spokesman for the Chinese Embassy, said that the U.S.-China economic relationship was “mutually beneficial” and that the proposals would “serve no one’s interests.”The report runs counter to “the principles of market economy and fair competition, and will undermine the international economic and trading order and destabilize global industrial and supply chains,” he said.The Retail Industry Leaders Association, a trade group that includes Target, Home Depot and Dollar General, said in a statement on Tuesday that it was concerned about the recommendations. Raising tariffs on Chinese products would “only harm U.S. businesses and invite retaliation from China,” it said.The lawmakers’ report acknowledged that such a change would be an economic burden, and suggested that Congress consider additional appropriations for farmers and other support for workers.Mr. Gallagher said that extricating the United States from its “thorough economic entanglement” with China would not be easy, and that Washington should work to develop alternative markets and prepare for potential retaliation from Beijing.Reaching consensus on the report required months of negotiations between Democrats and Republicans, which its authors said should send a message to China. Only one member of the 24-person committee voted against the report: Representative Jake Auchincloss, a Massachusetts Democrat who had concerns about protectionism.“One of the theories that the C.C.P. has about the United States is that we are divided, that we are tribal, that we are incapable of coming together to deal with challenges,” said Representative Raja Krishnamoorthi of Illinois, the committee’s top Democrat, referring to the Chinese Communist Party. “On this particular issue of competition between the United States and the C.C.P., we are of one mind.” More