GOP China hawks take aim at Tim Scott

Sen. Tim Scott — like every Republican presidential candidate — loves to talk tough on China.

His record in Washington tells a different story.

Since taking the top Republican slot on the powerful Senate Banking Committee this year, the South Carolina lawmaker has been one of the biggest roadblocks to new rules restricting U.S.-China trade — everything from TikTok bans to reviews of high-tech investment.

GOP national security hawks in Washington say that work doesn’t match the rhetoric in Scott’s recent presidential campaign ads in Iowa and New Hampshire, where the long-shot candidate slams “Joe Biden’s weakness” and promises to “keep China out of our homeland, and out of our data.”

Scott has “only been willing to support new China policies if there's very little cost, effectively saying that it isn't worth it to stand up to China,” said Derek Scissors, a senior fellow at the right-leaning American Enterprise Institute and a former member of the U.S.-China Economic and Security Review Commission. “For Sen. Scott in particular, this won't work. The spotlight of the primary makes it much harder to hide inconsistencies between words and actions.”

Scott’s awkward dance on China reflects just how much pressure GOP candidates are now under to take an aggressive line with Beijing, in the mold of former President Donald Trump, even when their positions hew closer to traditional Republican stances favoring free trade and unfettered American investment overseas. The debate between those free market Republicans and the more populist, anti-China wing of the party has grown increasingly tense on Capitol Hill over the past year, and now is spilling over into the presidential race. It could be a sticking point for GOP primary voters and donors who look to Scott as a possible Trump alternative.

Scott’s senior role on the Banking Committee has thrust him into the center of the congressional debate on China policy this year as the panel has considered multiple bills aimed at regulating trade and investment with America’s economic rival. While many China hawks hoped he would be more open to cracking down on Beijing than past GOP leaders on the committee, who were close to Wall Street, they have been disappointed.

“Scott has stayed pretty close to the traditional Banking Committee role in his first few months on the job, when I know there was a hope from many China hawks that he might be willing to be more of their champion,” said Eric Sayers, a former adviser to U.S. Pacific Command and Senate Armed Services staffer now at consultancy Beacon Global Strategies.

Scott’s team bristles at the criticism and points to his role in shaping bills to crack down on fentanyl ingredients coming from China and purchases of agricultural land by Chinese nationals, both of which were added to the yearly defense spending bill in the Senate that passed last month.

"Senator Tim Scott has consistently fought for tougher action against the [Chinese Communist Party] to stop them from buying up American farmland, spying on our kids, and taking American jobs,” said a spokesperson for the Scott campaign. “China has only been emboldened by Joe Biden's weakness, and Tim Scott knows it is time for a president who has a backbone and will go toe to toe with the Chinese Communist Party."

But Scott’s critics say he is on the wrong side of a much more significant policy fight — over how to regulate American investment in Chinese companies. National security officials under both Trump and now President Joe Biden have warned that U.S. banks are helping fund the Chinese Communist Party’s military advancements by investing in tech firms that assist the ruling party.

In recent months, Scott has used his Banking Committee perch to water down bipartisan Senate legislation that would have allowed the federal government to block deals with Chinese tech companies that presented national security risks, a controversial proposal among Republicans. Now, that measure requires only that U.S. firms notify the government when they make those investments. That change was demanded by Scott during negotiations to add the measure to the annual defense authorization bill, according to four officials on Capitol Hill and K Street with knowledge of the talks.

Sen. John Cornyn, one of the co-sponsors of the original legislation, told POLITICO on Capitol Hill last month that the language was scaled back because “it had to clear the Banking Committee.”

“We’ve changed it quite a bit since the beginning and this is merely a transparency provision at this point,” he said at the time.

Cornyn's office initially declined to comment for this story. But after it published, a spokesperson from the Texas Republican's office sent a statement disputing the description of the negotiations over adding language from the bill to the defense authorization.

“The changes to the original legislation weren’t made for any one Senator," the statement said. "Sen. Cornyn’s NDAA amendment reflects areas of compromise necessary to pass the legislation, including in the House of Representatives.”

The Senate voted overwhelmingly in favor of adding the scaled-back investment measure to the defense spending legislation last month, but Scott missed the amendment vote, as well as the vote on the amendment to restrict Chinese ownership of U.S. farmland, and the final vote on the full defense spending package. Scott’s campaign said the senator is in frequent contact with Senate leadership to attend votes that could be close.

Scott’s actions have raised the ire of some former Republican national security officials, who point out that the Biden administration is expected to issue an executive order that will go further than the Senate investment amendment, empowering the government to block risky deals in China. That could make Biden look stronger on China than Republicans in Congress and give Beijing more time to receive more tech funding before regulations hit.

“Notification kicks the can down the road,” said Nazak Nikaktar, who served as a senior trade official at the Department of Commerce under Trump. “We’re counting on congressional leadership and Sen. Scott’s leadership to prioritize American interests.”

Not all Republicans are as eager to crack down on U.S. investments in China. In recent months, House Financial Services Chair Patrick McHenry has pushed a more modest approach, focused on expanding existing corporate blacklists at the Departments of Commerce, Treasury and Defense, rather than imposing new disclosure requirements. Even the scaled-back amendment senators added their defense bill goes too far for the North Carolina Republican, who said last month that it “burdens U.S. firms while doing nothing to meaningfully deter the flow of U.S. dollars to the Chinese military-surveillance complex.”

But national security hawks also question some of Scott’s other China policies, including legislation he has drafted on TikTok, the Chinese social media behemoth, whose ties to the CCP and massive stores of user data has raised concerns across the West. Unlike his presidential rivals, Scott does not support banning the wildly popular app in the United States; his bill would only require app stores to display a notification if an app is Chinese-owned. That stance, and Scott’s longtime connections to Oracle founder Larry Ellison, whose firm hosts TikTok user data in the U.S., have already sparked backlash in conservative media. 

The hawks see a pattern in Scott’s positions: They reflect the China priorities of Wall Street, which broadly opposes new rules that would restrict American trade and investment in China and other nations. Scott has long been a beneficiary of financial sector contributions, with firms like investment bank Goldman Sachs and private equity firm Apollo Global Management among the top contributors to his past Senate campaign, according to the campaign finance tracking site Open Secrets.

Since he declared his presidential candidacy in May, Scott’s super PAC raised more than $19 million, with six-figure contributions coming from finance sector figures like Apollo Global CEO Mark Rowan and billionaire banker Ben Navarro — not to mention the nearly $11 million that Scott transferred from another PAC, Opportunity Matters, which also received Wall Street funding. Scott’s official campaign, meanwhile, raised nearly $6 million in the second quarter of the year, with dozens of finance, banking and venture capital figures contributing the maximum amount allowed by law.

Scott also received a contribution from the Republican he replaced at the top of the Banking Committee. The PAC for former Sen. Pat Toomey (R-Pa.) — the arch-free trader who steadfastly opposed regulating investment in China — gave a $25,000 contribution to Scott’s Trust in the Mission PAC.

“Scott is currently associated with what could be called ‘finance Republicans,’” said Scissors, listing him alongside GOP figures like McHenry and Senate Finance Ranking Member Mike Crapo of Idaho. “On China issues, this group adopts very similar positions to the U.S. financial sector.”

While the China hawks are increasingly vocal in the Senate, there is still a reliable bloc of traditional free-market, business-friendly Republicans who are skeptical of new trade and investment rules — some of whom endorse Scott’s efforts.

“I don’t think he was weakening” the proposed regulations on investment in China, said North Carolina Sen. Thom Tillis, who has softened his own stance on regulating American investments in recent months and voted against the scaled-back investment amendment to the defense authorization bill. “I think it’s getting everyone focused on the main priority. And the main priority is to continue investing in the Chinese market where it benefits us, and there are a lot of opportunities for that.”

But Tillis, Scott and others are at odds with another bloc of Republicans on Capitol Hill. POLITICO spoke to a half-dozen GOP China hawks who said they want to go further than Scott and give the government tools to block risky deals in China. They include Sens. Bill Hagerty, J.D. Vance, Josh Hawley, Rick Scott, Marco Rubio, Ted Cruz and John Cornyn, the main GOP sponsor of the amendment.

“Obviously we start out with disclosure, but I want to get to a point where we can actually stop the use of American capital to go into … technology that could be used militarily against us or our allies,” said Hagerty, who served as U.S. ambassador to Japan under former President Donald Trump, currently the front-runner for the Republican nomination.

None of those senators would directly criticize Scott — who is well-liked within the Senate GOP caucus, even if most have not gone so far as to endorse his presidential bid. Asked to assess Scott’s China record, Cruz replied, “Nice try, but I’m not going there.”