In China, ‘free trade’ means steal what you want
What can Democrat Chuck Schumer, Republican Marco Rubio and President Donald Trump agree on? Almost nothing, but they agree China is robbing America blind and has to be stopped.
When the president slapped a punishing 25-percent tariff on $50 billion worth of Chinese goods starting July 6, his least likely GOP ally, Sen. Marco Rubio, applauded the tariffs as a “theft tax.” Sen. Chuck Schumer backed them, too, warning that allowing China’s massive stealing to continue will cause “long-term real damage to America.”
Within hours of Trump’s announcement, China retaliated with $50 billion in tariffs on U.S. imports. Trump shot back with tariffs on another $200 billion in Chinese goods. China accuses Trump of “provoking the trade war.” Provoking? China’s been fighting dirty against American business for years. China steals something between $225 billion to $600 billion worth of fashion designs, pharmaceutical formulas and new technologies from U.S. companies every year, according to the Commission on Theft of American Intellectual Property.
Previous U.S. presidents did nothing but negotiate. That’s like watching a burglar strip your house and asking him, “Can we talk?” At last, an American president picked up a weapon — tariffs — to fight back.
Not a minute too soon. The stealing is getting worse. Politicians naively said admitting China to the World Trade Organization in 2001 would push it toward a free-market economy observing the rule of law. Magical thinking.
From the start, China violated WTO rules, knocking off American products and selling them as the real deal. A staggering 88 percent of counterfeit goods seized are from China and Hong Kong, according to Homeland Security. It’s like the Chinese thought “free market” meant steal what you want.
Steal it or extort it. American companies doing business in China are pressured to transfer proprietary technology to a local partner. China promised to stop that arm-twisting but broke its word.
Now, China is abandoning any pretense of respecting intellectual property. President Xi Jinping’s official economic policy, called Made in China 2025, elevates technology theft to official status. The government politely calls it “the assimilation and absorption of imported technology.” China plans to steal its way to economic dominance and end dependence on foreign suppliers.
American companies can’t thrive under this threat. Our advantage in world markets isn’t cheap labor or cheap materials. It’s ideas.
American Superconductor Corp. was almost put out of business, its stock value driven down 96 percent, when a Chinese wind turbine maker stole its technology and flooded the Chinese market with copies.
Tariffs are the U.S. response to “forced technology transfer and intellectual property theft by the Chinese,” U.S. Trade Representative Robert Lighthizer said on Monday.
Industries profiting from the status quo are nervous.
General Motors sells more vehicles in China than in the U.S. Multinational companies look at China’s middle class — now the world’s largest — and see huge sales ahead.
But if Beijing’s plan proceeds, these U.S. companies will be shut out of China in a decade, and will have to compete in the rest of the world against Chinese companies that stole their technology and enjoy low-cost financing from Chinese state banks.
Are tariffs the best weapon against this plan? Trump is threatening a third tranche, bringing the total to $450 billion. China only imports $130 billion worth of American goods, and won’t be able to keep up tit for tat. Advantage U.S.
Critics claim tariffs raise consumer prices, clobbering American households. That’s exaggerated. You might have to pay slightly more for a laptop or cellphone. But a whopping 88.5 percent of goods and services consumers buy are domestically produced, according to the Federal Reserve of San Francisco. The criticism also disregards the uncalculated price Americans are paying for Chinese intellectual property theft.
The real question is whether anything can make China stop stealing its way to the top. Trump may win concessions only to see China shamelessly pursue other criminal ploys.