A trade deal with China could put national security at risk
By Peter Morici
Jun 24, 2019 | 6:00 AM
Walmart says US-China trade war will lead to higher prices. The news comes after the Trump administration raised tariffs last week to 25%. According to Fortune, the administration says another round of tariffs worth 25% will be implemented soon.
President Donald Trump's planned meeting with Chinese President Xi Jinping at the G-20 summit, June 28-29, has created optimism that a deal to restore normal commercial relations may be possible. However, without extensive changes in Chinese policy and law — and tough enforcement provisions — any deal will prove a hollow victory and put our national security at risk.
Beijing's formula for modernization flaunts western rules for international competition it agreed to accept when it joined the World Trade Organization and which also required changes in its domestic statutes.
China uses opaque tactics to limit imports of products it can make domestically, refuses to reform a judicial system that is biased against foreign intellectual property rights and 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.
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China's 2001 WTO accession agreement was supposed to deal with most of those practices, but President Xi has taken the country in another direction and cultivated a culture that makes an acceptable trade agreement terribly difficult.
Compliance with WTO expectations of behavior would have required Communist Party leaders to encourage rising young members and private entrepreneurs to embrace western norms of honesty and transparency in dealing with foreigners and respect for their intellectual property. Instead, thanks to the internationally dispersed nature of developments in artificial intelligence and the difficulties of firewalling U.S. and allies' sophisticated software essential to the design, production and delivery of goods and services, the Chinese kleptocracy poses an existential threat to western democratic capitalism.
Owing to size, China's increasing capabilities in artificial intelligence 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 mean the West could easily fall under Beijing's yoke as Greece's civilization fell to Rome.
Contempt for foreign property rights is deeply embedded in Chinese political and business norms and values, 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 President Xi cannot likely deliver them.
Too much of the texts of WTO agreements pertain to practices that are quickly becoming ancient playing fields of competition — manufacturing major appliances, motor vehicles, merchant banking and motion pictures. Any government with a big enough 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.
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.