The US Congress must act urgently to counter the economic and national security threats posed by the Chinese government, a bipartisan chorus of lawmakers on a newly created special House committee has warned during an inaugural, primetime hearing.

The two superpowers were locked in an “existential struggle over what life will look like in the 21st century”, the committee’s Republican chairman, Mike Gallagher of Wisconsin, said as the rivalry between the US and China deepens.

With democracy advocates and protesters in attendance, the panel – formally the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party – began its work at a precarious moment for US-China relations. It comes weeks after a suspected Chinese spy balloon traversed the continental US and amid intelligence that Beijing is considering providing lethal weapons to aid Russia in its war against Ukraine.

Meanwhile, China’s militarization and aggression toward Taiwan, a self-ruled island that Beijing claims as its own, as well as its response to the coronavirus pandemic, have further escalated tensions.

Underscoring the broad range of challenges the panel hopes to address, lawmakers peppered the witnesses with questions on human rights abuses, trade policies, the influence of TikTok, aggression in Taiwan, the origins of Covid-19 and international espionage.

Gallagher hopes the committee will help shape China policy and legislation that can win support from both parties. But with the 2024 presidential campaign looming, and Republicans eager to paint Joe Biden as “weak on China”, the possibility of bipartisan action is likely to become increasingly narrow.

“Time is not on our side,” he said, imploring a bitterly divided Congress to come together to confront China. “Our policy over the next 10 years will set the stage for the next hundred.”

Illinois congressman Raja Krishnamoorthi, the ranking Democrat on the panel, echoed Gallagher’s sense of urgency. He said Democrats and Republicans had for years “underestimated” the Chinese government, believing that economic integration would “inevitably lead to democracy”. But it did not and now the US needed to move quickly to pursue economic and trade policies that would “up our game” as Americans to compete with China.

“We do not want a war within the PRC,” he said, referring to the People’s Republic of China, “not a cold war, not a hot war. We don’t want a clash of civilizations.”

The hours-long proceeding ​offered a rare display of cross-party unity in a​n​ otherwise bitterly divided Congress​. It featured two former advisers to Donald Trump: former national security adviser HR McMaster and former deputy national security adviser Matt Pottinger, a China expert who resigned after the January 6 attack on the Capitol.

Offering a sweeping overview of China’s rise, Pottinger said the success of the Chinese Communist party (CCP) at presenting itself as “responsible” and “normal” was “one of the great magic tricks of the modern era”.

“You could say the CCP is the Harry Houdini of Marxist-Leninist regimes; the David Copperfield of Communism; the Criss Angel of autocracy,” he said “But the magic is fading.”

McMaster said the US and western leaders were guilty of decades of “wishful thinking and self-delusion” in its efforts to integrate China into the international system. But he expressed optimism that the panel’s work could help lay the groundwork in Washington to “rebuild America’s and the free world’s competitive advantage”.

The panel met in the same chandeliered room where the House select committee investigating the January 6 attack on the Capitol held its hearings. In the audience were Hong Kong pro-democracy activists as well as anti-war protesters who interrupted the proceedings, with one yelling “this committee is about saber-rattling, it’s not about peace” as he was removed from the hearing room.

Several members remarked on the interference, noting that the right to protest was a hallmark of American democracy and a freedom not afforded to those in China.

Highlighting human rights concerns will be a major focus of the panel. On Tuesday, the panel heard compelling testimony from Tong Yi, a human rights activist who was the former secretary to one of China’s leading dissidents, Wei Jingsheng. Yi told how she was arrested and detained by the CCP in the 1990s. After spending nine months in a detention center she was charged with “disturbing social order” and sentenced to two-and-a-half years in a labor camp.

“In the US, we need to face the fact that we have helped feed the baby dragon of the CCP until it has grown into what it now is,” she said.

The committee also heard from Scott Paul, president of the Alliance for American Manufacturing, who argued that the US dependency on China has had a crushing impact on American workers and wages. “While conflict with China isn’t inevitable, fierce economic competition is,” he said.

On Capitol Hill, a bipartisan consensus has emerged around measures banning TikTok, the Chinese-owned social media app, bills barring Chinese citizens and companies from purchasing land near sensitive military sites, and efforts to limit US exports and technology trade to China. But there are also sharp divisions.

Republicans continue to assail Biden over his response to the suspected Chinese surveillance balloon, which was downed by the US military after it sailed across North America.

​Asked during the hearing what message China hoped to send with the balloon, McMaster said he believed it was likely a “metaphor for the massive effort at espionage” Beijing is carrying out around the world. China has denied the airship was used for spying, ​​claiming that it was a civilian aircraft blown off course​.

Meanwhile, revelations that the US energy department concluded with “low confidence” that the Covid-19 pandemic was the result of a lab leak in China has inflamed anew a partisan debate over the virus’s origins. Officials in Washington have said that US agencies are not in agreement over the virus’s origins.

Critics of the panel have raised concerns that heated rhetoric casting China as the US’s enemy would amplify anti-Asian sentiment amid a surge in hate incidents. Addressing those fears directly, Krishnamoorthi would avoid “anti-Chinese or Asian stereotyping at all costs”.

“We must recognize that the CCP wants us to be fractious, partisan and prejudiced – in fact, the CCP hopes for it,” he said.

Earlier on Tuesday, the House foreign affairs committee held a hearing focused on countering the rising national security threats posed by China. Testifying before the panel, Daniel Kritenbrink, US assistant secretary of state for east Asian and Pacific affairs, said China represented “our most consequential geopolitical challenge”.

Joan E Greve contributed to this report