- - Friday, August 16, 2019

ANALYSIS/OPINION:

We should be tough on China, but war between China and America would be terrible for both countries.

President Trump’s effort to goad China into making a trade deal already includes a 25 percent tariff on $250 billion worth of Chinese imports. Last week, however, Mr. Trump threatened to impose tariffs on the remaining $300 billion of Chinese imports at 10 percent. The new tariffs would kick in on Sept. 1 if current talks with China have not shown progress by that time, Mr. Trump said. And predictably, China retaliated by devaluing its currency versus the dollar.

These developments, and a worsening of U.S.-China relations on a host of other issues, have old China hands in Washington worried, as the D.C. establishment grows increasingly hawkish toward Beijing in security and economic policy alike. Going forward, the key question policymakers must tackle is how to be tough on China and stand up for American interests without increasing the odds of all-out war.

First off, America has a right to seek different behavior from China. Beijing has a stated policy of trying to steal American technology to build up its own industries, which means Western firms seeking to operate in China are often forced to hand over vital intellectual property to Chinese competitors, or to local Chinese officials who then leak trade secrets to Chinese competitors.

Some of these Chinese firms eventually go global, backed by the Chinese government and underselling their Western rivals on their rivals’ own turf. 



Even when a firm is not operating in China, its intellectual property and trade secrets aren’t safe. There is an FBI investigation into Chinese corporate espionage open in all 50 states, amounting to nearly 1,000 open cases. Toward the end of his second term, President Obama got China’s President Xi Jinping to commit to stop this hacking. The next year, the hacking only got worse.

Because of these abuses, the Trump administration is asking China to open more of its industries to foreign competition, end or reduce “joint venture requirements” which force American companies to partner with Chinese firms, and increase legal protection and enforcement for intellectual property rights. 

Earlier this year, China said it agreed do everything Mr. Trump requested but refused to sign a deal unless tariffs were immediately removed. But America wants compliance first, as there are business and legal reasons why tariffs can’t be quickly reimposed, and America doesn’t trust China — in just one example, China has twice tried to significantly alter the Chinese-language version of the agreement at the last minute. This brings us to where we are at today.

China is not our friend. But war with nuclear-armed China would be an unmitigated disaster. Entire U.S. cities would be destroyed, and millions of Americans and innocent Chinese would be killed.

Despite that real and terrible risk, the United States and China look dangerously close to confrontation over hegemony in Asia, a clash which could easily evolve into total war. America is selling not-so-defensive weapons to Taiwan and has pushed back heavily against Chinese efforts to assert control over the disputed South China Sea. 

Even on the economic front, where China has been extremely abusive, caution is in order. Despite China’s myriad trade abuses, reducing trade ties with China only makes war more likely. What should be done?  

The answer is for policymakers to be tough on China while avoiding actions that needlessly increase the chances of war. The first step is for America and China to start focusing on our areas of shared interest, to build a foundation of trust. 

One low-hanging fruit is China’s lack of agricultural purchases from America, which is not entirely due to the trade war. At least a third of China’s pig population has been wiped out by African swine fever (ASF), which is causing China to require less soybeans, even from Brazil (pigs eat soybean meal).

And even though China has restricted imports of U.S. pork since 2011 — calling it unsafe in yet another example of longstanding Chinese protectionism that went unchallenged — China has been buying more U.S. pork. ASF is a risk to the global ag industry, not just China’s pigs.

Washington should offer China unmitigated support toward dealing with the disease and should work with Beijing to allow increased pork exports from America. This olive branch would benefit all involved.

On the national security front, though, it would be wise to disallow the installation of Chinese telecoms giant Huawei’s kit domestically. America should make clear that it won’t kill Huawei — which is accused of being a spying-arm for the Chinese military — by ending computer chip exports. Threatening to do so only hurts U.S. chipmakers and speeds China’s move toward developing its own domestic chipmaking industry.

The next step is for policymakers to shy away from moves that do nothing for U.S. core interests, but still increase the risk of war. Generally, America should help support freedom of navigation and international rules, but we must reject a military posture that leads to confrontation.

Approval of arms sales or “freedom of navigation operations” through the Taiwan Strait or the South China Sea should keep in mind how America would react if China engaged in similar activities in our backyard. Washington’s top priority in China relations is avoiding a great power war.

The binary option between China hawks and China engagers is a false choice. We must engage China where our interests align and compete where they don’t. Pushing back on Chinese trade abuses leaves plenty of room for engagement that won’t push us toward war. 

• Willis L Krumholz, a fellow at Defense Priorities, works in the financial services industry.

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