By David Brunnstrom
WASHINGTON (Reuters) - A U.S. advisory commission warned on Wednesday that China's growing military might may make it more likely to use force to pursue its interests and called for a government probe into how far outsourcing to China has weakened the U.S. defense industry.
The annual report of the U.S.-China Economic and Security Review Commission pointed to a growing threat to U.S. national security from Chinese spying, including infiltration of U.S. organizations, and called on Congress to bar Chinese state enterprises from acquiring control of U.S. firms.
The release of the report to Congress comes a week after Donald Trump won the U.S. presidential election. Trump, an outspoken Republican who has vowed to take a tougher line in trade and security dealings with China than President Barack Obama, will take office on Jan. 20.
The panel is a bipartisan body set up in 2000 to monitor the national security implications of the U.S. trade and economic relationship with China and to make recommendations to Congress for legislative and administrative action.
Its report also called on Congress to back more frequent U.S. Navy freedom-of-navigation operations in the South China Sea, one of the world's busiest trade routes where China's building of artificial islands with military facilities has raised concerns about future freedom of movement. Beijing and its neighbors have conflicting territorial claims there.
The commission said ongoing reforms of the People's Liberation Army would strengthen Beijing's hand and noted that China was close to completing its first domestically produced aircraft carrier.
"China’s pursuit of expeditionary capabilities, coupled with the aggressive trends that have been displayed in both the East and South China Seas, are compounding existing concerns about China’s rise among U.S. allies and partners in the greater Asia," the report said.
“Given its enhanced strategic lift capability, strengthened employment of special operations forces, increasing capabilities of surface vessels and aircraft, and more frequent and sophisticated experience operating abroad, China may also be more inclined to use force to protect its interests,” it said.
The panel said that U.S. responses to the threat from Chinese intelligence gathering had suffered from a lack of a coordinated effort by U.S. intelligence agencies.
It said Congress should also direct the U.S. Government Accountability Office to prepare a report "examining the extent to which large-scale outsourcing of manufacturing activities to China is leading to the hollowing out of the U.S. defense industrial base."
"This report should also detail the national security implications of a diminished domestic industrial base (including assessing any impact on U.S. military readiness), compromised U.S. military supply chains, and reduced capability to manufacture state-of-the-art military systems and equipment," it said.
The commission's report also recommended that Congress call on the U.S. State Department to produce educational materials to alert U.S. citizens overseas and students going to China to the dangers of recruitment efforts by Chinese agents.
(Reporting by David Brunnstrom; Editing by Cynthia Osterman)