President Trump’s tough trade stance toward China is essential and enjoys bipartisan support, but U.S. strategies are wrong and put national security in great peril.
Beijing’s formula for modernization flaunts with contempt of the rules for competition among civilized nations that it pledged to honor when it joined the World Trade Organization.
It severely limits imports of products it can make domestically, refuses to reform a judiciary biased against foreign patents and copyrights, and it orchestrates consumer boycotts against foreign companies, like Samsung, to gain advantage in foreign policy disputes unrelated to commercial considerations.
It promotes domestic production and exports through huge subsidies, pressures foreign investors to cede valuable intellectual property and steals technology through brazen state-sponsored industrial espionage.
China’s 2001 WTO accession agreement was supposed to deal with most of those practices, but President Xi Jinping and his predecessor have repeatedly demonstrated China’s word is as worthless as those of German leaders during the 1930s.
Compliance would have required Communist Party leaders to encourage rising young members and private entrepreneurs to embrace Western norms of fairness, honesty and decency in dealing with foreigners. Instead, its markets are more closed, exports more subsidized and thanks to the Internet and the increasing importance of sophisticated software in the design, production and delivery of modern goods and services, the Chinese kleptocracy poses an existential threat to Western democratic capitalism.
Owing to size, China, along with the United States and a few other Western nations, creates most of the world’s cutting edge technology. If everything China invents is respected by Western law and business conduct but what the West invents can be stolen by Chinese entrepreneurs and military with impunity, the West will fall under Beijing’s yoke as Greece’s civilization fell to Rome.
The U.S. strategy of imposing rather weak tariffs — most of the retaliatory tariffs are 10 percent and have been neutralized by yuan depreciation — to essentially compel China to honor its 2001 commitments won’t work.
Contempt for foreign property rights is religion in China and the real negotiating partners — China’s deep-state bureaucracy and state-owned enterprises, military and private business chieftains — are not at the table and Mr. Xi can’t deliver them.
In 2015, China signed an agreement to end state-sponsored industrial espionage. Beijing simply redirected its reavers toward more vulnerable targets in Asia and Europe and then, when President Obama left office, resumed stealing American intellectual property.
The Justice Department has indicted, for example, officials of Chinese cybersecurity firm Boyusec for hacking Moody’s Analytics, Siemens AG and U.S. global-positioning system developer Trimble Inc., but too many Chinese businesses, their executives and state sponsors are beyond the effective jurisdiction of American courts.
Too much of what is in those quaint WTO texts pertains to quickly becoming ancient playing fields of competition — manufacturing major appliances, motor vehicles, merchant banking and motion pictures. Any government with a checkbook can foster an industry in one of those.
The real competition is in super computing, space exploration and artificial intelligence that will deliver both commercial and military dominance by mid-century. Those offer possibilities for explosive growth akin to the spread of mass production and automation in the 20th century.
The same kinds of artificial intelligence that permits smartphones and facial recognition to track web surfing and personal movements to generate targeted advertisements and for police to anticipate criminal acts will enable the Chinese and Russian militaries to anticipate the tactics and neutralize the effectiveness of the U.S. Navy and Air Force, and ultimately destroy American civic institutions and markets — if we let either vault into the lead.
China supplements trade policies and commercial espionage with well-financed national strategies to accomplish dominance in super computing, space exploration and artificial intelligence by 2030. It’s ludicrous to believe American negotiators can smother those ambitions with treaties that Beijing will violate at first opportunity.
It’s time to join the commercial war on China — for real. Impose a tariff that compels balanced trade with China — allocate by auction quotas that limit imports to the value of exports to China. And finance aggressive national strategies in advanced computing, space exploration and artificial intelligence that ensure national survival — things the Trump administration has been too distracted to quickly accomplish.
All those require higher prices for toasters and teapots at Target and less entitlement spending and higher taxes, but national survival has no price too high.
• Peter Morici is an economist and business professor at the University of Maryland, and a national columnist.