A food safety factory shutdown has Americans hunting for baby formula. Readying themselves for a covid-19 lockdown, Chinese in Beijing emptied store shelves. Emerging from lockdown, some in Shanghai are visiting well-provisioned markets. U.S.-China agricultural trade is booming, but many are still being left hungry. Food security, sustainability and safety remain issues.
White House Office of Trade and Manufacturing Policy, Chinese Economic Aggression Threaten US Intellectual Property, June 2018
Peter Navarro is the director of this White House office. A summary follows. The full report is available at the link below.
China’s Strategies of Economic Aggression
“The Chinese government is implementing a comprehensive, long-term industrial strategy to ensure its global dominance.... Beijing’s ultimate goal is for domestic companies to replace foreign companies as designers and manufacturers of key technology and products first at home, then abroad.” U.S.-China Economic and Security Review Commission
The People’s Republic of China (China) has experienced rapid economic growth to become the world’s second largest economy while modernizing its industrial base and moving up the global value chain. However, much of this growth has been achieved in significant part through aggressive acts, policies, and practices that fall outside of global norms and rules (collectively, “economic aggression”). Given the size of China’s economy and the extent of its market-distorting policies, China’s economic aggression4now threatens not only the U.S. economy but also the global economy as a whole.
In some respects, China has been transparent about its aggressive acts, policies, and practices. They are revealed in Chinese government documents,through behaviors of Chinese State actors, and from reports produced by business organizations, think tanks, and government agencies. Four categories of such economic aggression which are outside the scope of this report include:
- Protect China’s Home Market From Imports and Competition: This category features high tariffs, non-tariff barriers, and other regulatory hurdles.
- Expand China’s Share of Global Markets: Industrial policy tools include financial support to boost exports and the consolidation ofS tate-Owned Enterprises into“national champions” that can compete with foreign companies in both the domestic and global markets. Chinese enterprises also benefit from preferential policies that lead to subsidized overcapacity in China’s domestic market, which then depresses world prices and pushes foreign rivals out of the global market.
- Secure and Control Core Natural Resources Globally: China uses a predatory “debt trap” model of economic development and finance that proffers substantial financing to developing countries in exchange for an encumbrance on their natural resources and access to markets. These resources range from bauxite, copper, and nickel to rarer commodities such as beryllium, titanium, and rare earth minerals. This predatory model has been particularly effective in countries characterized by weak rule of law and authoritarian regimes.
- Dominate Traditional Manufacturing Industries: China has already achieved a leading position in many traditional manufacturing industries. It has done so in part through preferential loans and below-market utility rates as well as lax and weakly enforced environmental and health and safety standards. As the European Chamber of Commerce has documented: “For a generation, China has been the factory of the world.” By 2015, China already accounted for 28 percent of global auto production, 41percentof global ship production, more than 50 percentof global refrigerator production, more than 60percent of global production of color TV sets, and more than 80percentof global production of air conditioners and computers.
In addition, China pursues two categories of economic aggression that are the focus of this report. These include:
- Acquire Key Technologies and Intellectual Property From Other Countries, Including the United States
- Capture the Emerging High-Technology Industries That Will Drive Future Economic Growth and Many Advancements in the Defense Industry
This report will document the major acts, policies, and practices of Chinese industrial policy used to implement these two strategies.16Through such implementation, the Chinese State seeks to access the crown jewels of American technology and intellectual property.(A compendium of the acts, policies, and practices used to implement China’s six strategies of economic aggression is presented in the Appendix.)
How China Seeks to Acquire Technologies and Intellectual Property and Capture Industries of the Future
Chinese industrial policy seeks to “introduce, digest, absorb, and re-innovate”17technologies and intellectual property (IP) from around the world. This policy is carried out through: (A) State-sponsored IP theft through physical theft, cyber-enabled espionage and theft, evasion of U.S. export control laws, and counterfeiting and piracy; (B) coercive and intrusive regulatory gambits to force technology transfer from foreign companies, typically in exchange for limited access to the Chinese market; (C) economic coercion through export restraints on critical raw materials and monopsony purchasing power; (D) methods of information harvesting that include open source collection; placement of non-traditional information collectors at U.S. universities, national laboratories, and other centers of innovation; and talent recruitment of business, finance, science, and technology experts; and (E) State-backed, technology-seeking Chinese investment.