WASHINGTON—U.S. Senator Chris Murphy (D-Conn.), a member of the U.S. Senate Foreign Relations Committee, on Wednesday asked Elizabeth Economy, a senior fellow for China studies at the Council on Foreign Relations, about how we can compete with China and whether his proposed national security budget increase, Investing in 21st Century Diplomacy, would effectively help us meet this challenge at the committee hearing, “Advancing Effective U.S. Policy for Strategic Competition with China in the Twenty-First Century.” Murphy focused his questioning on the need to increase our development finance investments and diplomatic presence in order to counter China’s rising influence.

“I wanted to build upon Senator Romney’s questions regarding the scope of Chinese economic development efforts and just note that we have essentially voluntarily put one hand behind our back. We have an international development finance bank, one that is more nimble and more comprehensive today thanks to efforts of Congress to establish the DFC, but its cap is around $60 billion, whereas the Chinese development bank's overall portfolio today is $1.3 trillion,” said Murphy. “And so if we don't start getting in the international economic development game, at the very least with the capacities that we have today, then there's absolutely no way to be able to meet China where they are. There's no effective China strategy that doesn't involve very close cooperation with Europe and these development finance projects can be much more effective if they are done jointly with European partners.”

On Tuesday, Murphy along with U.S. Senator Chris Van Hollen (D-Md.), U.S. Representative David Cicilline (RI-01), and U.S. Representative Ami Bera (CA-07) proposed a significant increase to the international affairs budget for Fiscal Year 2022 to better address America’s national security challenges. Investing in 21st Century Diplomacy calls for a $12 billion increase, directing the funding toward three specific challenges: (1) competing with China; (2) preparing for the next pandemic in a post COVID-19-era; and (3) fighting climate change. In 2017, Murphy proposed doubling the State Department budget over five years to develop stronger capacities to respond to contemporary challenges in his white paper Rethinking the Battlefield. In 2019, Murphy penned a piece for the Atlantic in which he makes the case that a new Democratic administration needs a new foreign policy toolkit to advance our values and interests abroad.

Click here for video of Murphy’s full exchange with Elizabeth Economy, Senior Fellow for China Studies at the Council on Foreign Relations.

You can read Murphy’s full exchange with Economy below:

MURPHY: “Mr. Chairman, this has been incredibly informative, a fantastic panel. Thanks for taking the time with us. I wanted to build upon Senator Romney’s questions regarding the scope of Chinese economic development efforts and just note that we have essentially voluntarily put one hand behind our back. We have an international development finance bank, one that is more nimble and more comprehensive today thanks to efforts of Congress to establish the DFC, but its cap is around $60 billion, whereas the Chinese development bank's overall portfolio today is $1.3 trillion.

“And so if we don't start getting in the international economic development game, at the very least with the capacities that we have today, then there's absolutely no way to be able to meet China where they are. And so I wanted to ask that question about whether the DFC is the proper entity to be able to compete internationally for development financed projects, whether you think that we need some new special purpose vehicle, and then to ask about this question of how we can better integrate with our European partners.

“There's no effective China strategy that doesn't involve very close cooperation with Europe and these development finance projects can be much more effective if they are done jointly with European partners. So we wanted to open up that line of questioning to the panel.”

ECONOMY: “Okay, so let me start I guess. So I think the Development Finance Corporation is a terrific innovation. Some people have proposed that perhaps there should be another one that's explicitly devoted to technology, so that the Development Finance Corporation can focus on the harder infrastructure, and then we can have one that deals with technology infrastructure, so we would need more investment.

“But obviously, you're right, we need to partner with Asian allies and European allies. Europeans are concerned about China's inroads within Europe, in particular. They also have their own Asian connectivity strategy that they've talked about. But my experience in dealing with Europeans is that they have a less of a threat perception when it comes to China than our Asian partners, and so they're a little bit slower off the mark. 

“That doesn't mean that we shouldn't consider them, continue to try to work with them, but I do think that they are not quite as invested in terms of pushing back against China. They don't have the same degree of threat perception, I think, as the United States and our Asian partners. So I'm all for cooperating with Europe, I just think it will be more difficult than not with some of the major economies. UK may be an exception, but I think France and Britain, in particular, are a little bit dragging their heels.”

MURPHY: “Let me follow up with a question about our diplomatic efforts. Last year was the first year that China had more diplomatic posts around the world than the United States did. And I have conveyed a few times during the committee's proceedings a story from a recent trip I took to Dublin at the exact moment that they were going through a tender for a 5g contract.

“Our embassy there noted that the Chinese Embassy had swelled in personnel. That was not coincidental to this private sector contract tender. Chinese diplomats had all of a sudden shown up to make the case, but we have no capacity to do that, nor do we frankly have any strategy that would involve integration of US diplomats, with private sector contracts in any meaningful way.

“A group of us yesterday proposed a pretty dramatic increase in just the size of the US diplomatic corps, in part to be more nimble in order to support private sector efforts to compete with China around the world. What do you make of China's investment in diplomacy posts, and is it necessary for us to keep up?”

ECONOMY: “Absolutely. And again, it speaks to that sort of strategic and multi-level, multi-domain approach that I mentioned. China basically grasps everybody and deploys them toward a single objective, as you point out. So their embassy people become involved in pushing for Huawei. They'll fund universities to do studies on the Belt and Road and the digital Silk Road provides scholarships for students to come back for the best essays to talk about why it works.

“You're right, we're not going to compete. But I will say, I did research in Greece and I will say that the American ambassador there, he brought the host of the American pavilion, it was the year of the United States when he was there, he brought American companies like Google and others and they did sort of incubator things and innovation workshops. 

“And everywhere I went in Greece, people talked about how effective that diplomacy was. Secretary Pompeo visited once, if not twice, the head of the Development Finance Corporation went to Greece and all of a sudden, Greece, which had two pilot projects on Huawei underway, now is not going to use Huawei and its 5G infrastructure moving forward.

“So I think it's enormously important to have a strong diplomatic presence that’s capable of understanding what's going on on the ground and to bring in the firepower from Washington when needed.”

MURPHY: “It's a good reminder that diplomacy is both about quantity and quality. Ambassador Pyatt is truly exceptional and we can learn from his efforts in Greece. Thank you for your time. Appreciate it.”

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