Chinese control of the American drone and consumer electronic marketplace sets up the possibility the Communist government can enlist this network of U.S.-based systems to operate the equivalent of “hundreds of thousands of spy balloons” inside the country, according to the chair of the House Select Committee on China.
“Congressional concern stems from the PRC having hundreds of thousands of spy balloon equivalents operating daily across our nation—not only jeopardizing our homeland but giving the PRC a dominant position in an industry that is already playing a key role on the frontline of modern warfare,” Rep. John Moolenaar (R., Mich.) will warn Wednesday during a hearing on China’s efforts to dominate this marketplace.
The technology that powered a CCP spy balloon as it traversed the continental U.S. in 2023—drawing widespread panic from American intelligence officials and lawmakers—is embedded in drones and other technology manufactured by DJI, a Chinese firm that controls around 80 percent of the U.S. commercial drone market and that the American government deems a spy risk. Wednesday’s hearing will hear from a variety of experts as the House committee examines the Chinese government’s “strategy to dominate semiconductors, shipbuilding, and drones.”
“Chips, or semiconductors, power everything from the guidance system on missiles to satellites, mobile phones, computers, and cars,” according to an advance copy of Moolenaar’s remarks provided to the Washington Free Beacon. “Ships transport cargo around the world and form the navies that can blockade global supply lines or enable invasions.”
China, through all of these sectors, is developing the means to enact a naval blockade of Taiwan, “which would cut off the foundries that produce virtually the entire world’s supply of advanced semiconductors,” according to Moolenaar. “America’s industrial capacity has waned while China has gained dominance or is in the process of gaining dominance over each.”
As China makes gains in the development of advanced technology, it is also investing heavily in more traditional military markets, such as shipbuilding.
The United States currently accounts for “one-tenth of one percent of global shipbuilding,” while the CCP’s state-funded shipyards “account for 54 percent,” according to Moolenaar.
China, the U.S. Naval Institute warned in February, has “an overwhelming strategic advantage against the United States in a potential sustained conflict.” The United States has repeatedly failed to adequately invest in its naval fleet, leaving Beijing with a massive edge.
China, the Naval Institute says, “has 46.59 percent of the global market and is the largest builder.” The United States, on the other hand, “has a relative[ly] insignificant capacity at 0.13 percent.”
“The greatest challenge the Navy faces in preparing for a potential war with China is reestablishing its ability to build, maintain, and repair ships,” according to the military think tank.
On the semiconductor front, China expanded its manufacturing capacity in 2024 more “than the rest of the world combined,” according to Moolenaar. The CCP’s capacity is expected to grow by another 13 percent throughout the end of this year, with an additional $47.5 billion in subsidies announced in May.
“Across each of these sectors, the CCP playbook is simple, straightforward, and consistent,” Moolenar will say in his remarks. “Using a combination of illegal subsidies, hardball tactics, IP theft, and forced labor, the party gains a stranglehold over the world’s most important supply chains.”
To counter these gains, the United States must “install market access barriers” in various sectors to stop the CCP’s largest firms from domestic domination.
“We need to leverage and build upon crucial authorities to ensure the security of data and communications across our country,” according to Moolenaar. “We need to cut off access to the U.S. technology and capital that helps fuel PRC national champions and critical sectors. And we need to coordinate with our allies to encourage them to mirror these steps.”
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