By Kate O’Keeffe
Wall Street Journal – Dec. 2018 (but more pertinent than ever)
The two global powers have grabbed headlines over trade tensions, but confrontations are flaring up on other fronts as well. Washington is seeking to counter Beijing’s moves to expand influence around the world through investment and infrastructure loans.
U.S. warships and planes routinely patrol the South China Sea to challenge Beijing’s claims to the disputed territory, just as China ramps up military spending. And the Trump administration is taking measures to thwart the tactics China uses to acquire technology, particularly from U.S. companies.
Both sides accuse the other of aggression, but the Trump administration has gone out of its way to assert that its strong stance against China is a significant departure from previous U.S. administrations, and that its tough new approach will continue for the foreseeable future.
At the core of the tensions between the world’s two largest powers is President Trump’s belief that U.S. trade deficits are tantamount to the loss of American wealth. China has the greatest trade advantage among all U.S. trading partners, with an annual surplus in merchandise trade of $375 billion.
The Trump administration has placed ever increasing tariffs on Chinese imports to address the imbalance, and China has retaliated with its own levies on U.S. exports. U.S. businesses are generally unhappy with the tariffs, seen as a blunt instrument that hurts U.S. markets and consumers more than it helps.
Meanwhile, the U.S. business community—long seen as a natural ally to China among U.S. interest groups—has grown much less willing to defend it in the face of the Trump administration’s efforts, in large part because of mounting discontent with Beijing’s policies to acquire coveted U.S. technology, sometimes with military applications.
Chinese policy makers, through a variety of means, require foreign businesses to share technology with domestic counterparts as a condition of gaining access to their huge markets. In other cases, Chinese entities steal U.S. technology or attempt to circumvent processes that would prevent them from buying it.
China’s loss of support among the business community, to some observers, is another sign that the tensions between the two countries could extend well into the months and years ahead.
The Trump administration has tapped into this shift, recently launching a new plan to use export controls, indictments and other tools to counter China’s theft of intellectual property.
The opening move in the new strategy came in the form of a recent crackdown by the Commerce and Justice departments on a Chinese state-owned chip maker, which the U.S. administration accused of stealing trade secrets from Idaho-based Micron Technology Inc. as part of China’s quest to build its own semiconductor industry, the people familiar with the matter said.
Meantime, an interagency committee led by the Treasury has also been playing a key role in stopping Chinese technology deals that it deems a threat to national security. That even includes deals that don’t involve Chinese companies but hold potential implications for U.S.-China relations.
Earlier this year, the Committee on Foreign Investment in the U.S. cited the dominance of China’s Huawei Technologies Co. in the telecommunications-equipment industry when it advised President Trump to block Broadcom Ltd.’s $117 billion bid for U.S. semiconductor giant Qualcomm Inc.
The U.S. and China are also increasingly at odds over political issues including human rights. Sen. Marco Rubio (R., Fla.), chair of the bipartisan Congressional-Executive Commission on China, and Bob Menendez (D., N.J.), ranking member of the Senate Foreign Relations Committee, introduced the Uyghur Human Rights Policy Act in response to China’s internment of some one million Uighurs, a largely Muslim minority group, as well as Chinese Communist Party intimidation of U.S. citizens and permanent residents on U.S. soil.
Tensions between the two countries’ militaries are also escalating, especially in the South China Sea. China’s Central Military Commission earlier this year took direct control over the country’s coast guard, adding reinforcements to the region.
Some of the U.S.-China issues cut across multiple themes. For example, the U.S. administration is struggling with policy options to protect U.S. universities, where Chinese Communist Party initiatives target technology and threaten academic freedom. It is a particularly difficult problem because the American academic system prides itself on its openness, and many Chinese scholars bring both expertise and funding.
A new report by a nonpartisan think tank backed by the Australian government found that scientists from China’s military—at times obscuring their military affiliation—are significantly expanding research collaboration with scholars from the U.S. and other technologically advanced countries in areas like quantum physics, cryptography and autonomous-vehicle technology.
“America had hoped that economic liberalization would bring China into greater partnership with us and with the world,” Mr. Pence said in his speech. “Instead, China has chosen economic aggression, which has in turn emboldened its growing military.”
Ms. O’Keeffe is a Wall Street Journal reporter in Washington.
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