On November 13, 2026, the United States House of Representatives’ Special Committee on China released a significant bipartisan report titled “Rigging the Game: How China Undermined Western Manufacturing and Helped Hollow Out American Industry.” The report aims to shed light on the challenges posed by China’s economic strategies, particularly in relation to American manufacturing capabilities.
The document was jointly introduced by Committee Chair John Moolenaar, a Republican representative, and the senior Democratic member Ro Khanna. Moolenaar emphasized the exceptional quality of American workers and the country’s innovative spirit, stating, “The American workforce and our capacity for innovation are second to none. However, China’s predatory trade practices and massive subsidies have hollowed out our manufacturing base. It is imperative that we revitalize American industry to ensure we are not forever reliant on China for critical products.”
He further noted that “the United States is rich in resources, talent, and capacity. With our skilled workforce and the creativity of Americans, we can reinvigorate our manufacturing sector.”
In contrast, Khanna highlighted the long-term strategic targeting of essential industries and technologies by the Chinese Communist Party (CCP). “For decades, the CCP has sought to monopolize key areas, and unfortunately, American workers, communities, and our national security have borne the cost. As China intensifies its efforts to win the innovation race and dominate crucial supply chains, we must learn from the past and invest in the future.”
The report points out that the Chinese government has consistently employed a “whole-of-society” mobilization via a state-led economic model. This approach includes widespread fiscal subsidies and deliberate manufacturing of excess industrial capacity, alongside stringent regulatory restrictions that aim to dominate global key industries. Such non-market competition systematically undermines the functioning of free market mechanisms, resulting in a severe erosion of the manufacturing base in Western countries.
Additionally, the report reveals that Beijing has long employed tactics like forcing foreign companies to form joint ventures, engaging in intellectual property theft, and mandating technology transfer to extract innovation and capital from overseas. However, the core focus of the report lies primarily on domestic industry policies.
The report outlines several key points and analyses aimed at comprehensively deconstructing Beijing’s industry expansion logic and its underpinning mechanisms of state capitalism:
**Dual-Track Geoeconomic Strategy:**
Beijing’s strategic intent is marked by a clear “internal-external separation” model. Externally, it pursues a highly predatory expansion of exports and capacity, leading to significant global supply chain reliance on Chinese manufacturing. Internally, it actively seeks to replace imports and achieve technological independence to mitigate its vulnerability to foreign supply chains, aiming to overcome the so-called “chokehold” dilemma.
**Civil-Military Fusion and Capacity Advantages:**
The report warns that modern great power competition is not solely about technology; it also involves competition in capacity and logistical mobilization. Beijing’s expansion of state capital strictly follows the “civil-military fusion” guideline. For instance, in the shipbuilding sector, China’s capabilities have reportedly reached 230 times that of the United States, indicating a robust commercial shipbuilding and foundational infrastructure that can swiftly pivot to military vessel repair and construction in times of conflict.
**Continued High Industrial Subsidies:**
Estimates from the Center for Strategic and International Studies (CSIS) highlight that in 2019 alone, Beijing’s spending on various industrial policies amounted to around $248 billion, which accounted for 1.73% of its GDP. This figure far exceeds the levels of investment seen in the United States (0.39%) and South Korea (0.67%).
To accomplish these strategic goals, Beijing’s state machinery weaves a dense support network through multiple policy dimensions, specifically focusing on four areas:
1. **Subsidy Framework:**
This includes direct financial subsidies, research and development tax incentives, and low-interest loans from state-owned banks.
2. **Regulatory and Land Control:**
Leveraging land leasing rights and administrative approval authority as indirect subsidies or pressure tactics.
3. **Government-Led Funds:**
Utilizing state capital as leverage (for instance, the large “National Integrated Circuit Industry Investment Fund”) to attract local government and private sector investments in strategic industries.
4. **State-Owned Enterprises (SOE) Coordinated Procurement:**
Capitalizing on the massive procurement needs of public sector and state-owned enterprises to provide a stable initial market for supported companies.
To validate the effectiveness of these strategies, the report conducted an in-depth analysis of four key areas:
**Biomanufacturing:**
This industry has been officially included in China’s 14th and 15th Five-Year Plans. Under the powerful catalysis of state capital, the biomanufacturing sector’s scale reached approximately 1.1 trillion RMB (about $165 billion) during the 14th Five-Year Plan, with fermentation products accounting for over 70% of global output and over 20% of related patent applications worldwide.
**Aerospace:**
Represented by the Commercial Aircraft Corporation of China (COMAC), efforts are being made to break Western duopolies with aircraft models like the C919 (narrow-body) and C929 (wide-body). However, despite receiving significant state funding and subsidies estimated by CSIS to be between $49 billion and $72 billion, the sector still confronts considerable hurdles, including a heavy reliance on Western core engine technology and avionics systems, supply chain vulnerabilities due to geopolitical constraints, severe delivery lags, and the absence of vital airworthiness certifications from the U.S. and Europe.
**Semiconductors:**
Strategic focus is directed at mature processes of 28nm and above, viewed as a safeguard for the automotive, IoT, and consumer electronics sectors. Through ten years of corporate income tax exemptions, 120% R&D expense deductions, and massive investments from the “Big Fund,” China’s share of global mature process capacity is expected to reach 34% by 2024.
**Machine Tools:**
Regarded as “the machine that makes machines,” high-end CNC machine tools have been integrated into national technology programs, deeply tying in with national defense and military modernization. Localization rates for lower-end CNC equipment have nearly reached 100%, while mid-range equipment has achieved 73.5%. With the strong drive from national policies and state-owned enterprises such as the Aviation Industry Corporation of China, the market share for domestically-produced high-end CNC machinery has also risen above 30%.
The report concludes with a stark warning: the long-term, state-driven economic development model adopted by the CCP poses a significant “existential threat” to the national security, economic stability, and technological leadership of the United States.
The committee is urging the U.S. government to transcend partisan divisions and engage in long-term mobilization, elevating the reconstruction of the domestic manufacturing base to a national strategic level comparable to the “Manhattan Project” or the “Interstate Highway System.”
The United States must closely coordinate with its allies to establish concrete and robust industrial revitalization and defense policies aimed at vigorously countering unfair competition from Beijing while proactively addressing the hollowing out of American manufacturing communities resulting from decades of deindustrialization.