No Winners?

 “[C]onfrontation, whether in the form of a hot war, cold war or trade war, will produce no winners.” 

 Chinese President Xi Jinping, November 17^th

There’s tons of truth in those words, particularly as they relate to either the exchange of unsustainable tariffs that are damaging both the United States and China in their escalating trade war or the prospect of military confrontation. We may have the most powerful military on earth, including the largest navy, but our forces are spread all over the world. China may have a navy that is second to our own and an army that rivals Russia, but its forces are concentrated in Asia and nowhere else. So in their backyard, they are clearly the big dog. For a tad more, see my October 5^th and September 17^th blogs, China Greets a Failing Superpower and Strong China’s Message, Loud and Clear, respectively.

Yet as the Trump administration pulls out of multinational treaties, cuts foreign aid and declares trade wars on many fronts, China simply smiles and sends its diplomats and negotiators to those affected countries, particularly in the Asia Pacific region, pretty much on the next plane, with glittering offers of alternatives. Attending several major pan-Asian conferences that Donald Trump elected to avoid, Vice President Mike Pence appears to be suggesting foreign policy initiatives, even making specific offers to participating nations, that appear to put him at odds with Trump’s “America First” “go it alone” brand of neo-nationalism.

Pence is telling those nations who are the subject of China’s “Belt and Road” initiative to question China’s apparent “largesse,” to look at the fine print and the massive debt that China imposes along with her “gifts.” Indeed, as the Maldives are currently questioning, those debt loads are so high that no one really expects the recipient nation to be able to repay. But when the debtor nation declares that it cannot, everyone expects China to renegotiate or forgive that debt… with more than a few strings that will force that deadbeat country to kowtow to China’s political mandate. Where Trump fails to appear at major conferences, the People’s Republic of China has no problem producing the big guns to garner most of the regional press.

“Pence, taking the stage after Xi at the Asia-Pacific Economic Cooperation summit in Papua New Guinea [on November 17^th], launched a pointed and wide-ranging criticism of China, over not only its commercial practices but also its transcontinental infrastructure projects and military activity in the South China Sea.

“Reiterating U.S. commitment to Asia, Pence saved his most pointed words for Xi’s flagship foreign policy initiative — the infrastructure investment plan known as the Belt and Road Initiative — as he warned countries about accepting Chinese loans for port and transportation projects scattered from Pakistan to Indonesia.

“‘We don’t drown our partners in a sea of debt. We don’t coerce or compromise your independence,’ Pence said. ‘We do not offer a constricting belt or a one-way road.’

“The United States ‘offers a better option,’ he said as he unveiled a new regional transparency initiative and $60 billion in U.S. investments for the region… The Trump administration has voiced a far harder line against China and its growing footprint and rising assertiveness, spurring talk on both sides of the Pacific of a new cold war… But the U.S. president’s absence was conspicuous last week at two major Asian summits where Xi, instead, dominated the limelight.” Los Angeles Times, November 18^th.

Trump’s “baby and bathwater” mixture of trade polices tends to offend both “free trade” Republicans and consumer-price-sensitive Democrats alike. Tariff wars have never produced the promised benefits for either side of a trade war for centuries. Still, to those unfamiliar with economics, the sound good even if the results can truly trigger a major recession. But this slapdash attempt to use bully tactics is so distasteful and unproductive that many of Trump’s detractors miss portions of Trump’s trade with China that actually make a lot of sense (which does seem to rhyme with “Pence”… at least on issue).

The part of the trade demands that merit vigorous pursuit all revolve around China’s legendary and well-substantiated proclivity resort to any and all means at its disposal to steal America’s technology and intellectual property. This is more than the knock-off trade in fake designer labels; this is the heart and soul of U.S. cutting-edge research, patents and even government military technology. Sometimes, this purloining of American values is required disclosure by U.S. tech companies for the privilege of doing business in China. But a whole lot of this theft is accomplished by a massive Chinese efforts towards military and industrial espionage.

On the industrial level, American companies have lost untold billions and billions of dollars as the PRC simply steals the heart out of some of the most valuable patents on earth. The November 18^th Los Angeles Times examines one of the latest Chinese theft, a veritable drop in the bucket against the decades of uninterrupted theft.

“It was the great microchip heist — a stunning Chinese-backed effort that pilfered as much as $8.75 billion in patented American technology.

“U.S. officials say the theft took a year to pull off and involved commercial spies, a Chinese-backed company, a Taiwanese chip maker and employees affiliated with Micron Technology, a U.S.-based microchip behemoth.

“Yet what Micron called ‘one of the boldest schemes of commercial espionage in recent times’ is most notable because it’s not unusual.

“Beijing over the last two years has significantly ramped up its swiping of commercial technology and intellectual property, from jet engines to genetically modified rice, as U.S. relations with China have grown more acrimonious under President Trump, according to U.S. officials and security experts.

“‘They want technology by hook or by crook. They want it now. The spy game has always been a gentleman’s game, but China has taken the gloves off,’ said John Bennett, the special agent in charge of the FBI’s San Francisco office, which battles economic spies targeting Silicon Valley. ‘They don’t care if they get caught or if people go to jail. As long as it justifies their ends, they are not going to stop.’

“The Trump administration has toughened its rhetoric against China and announced several dramatic arrests as the threats — and the costs — have soared. In a harshly worded speech last month, Vice President Mike Pence accused Chinese security agencies of masterminding the ‘wholesale theft of American technology.’

“China long has prioritized stealing U.S. intellectual property to boost its domestic industries and its rise as a global power, according to federal law enforcement officials. They say Beijing relies on an army of domestic computer hackers, traditional spies overseas and corrupt corporate insiders in U.S. and other companies.

“The surge in economic espionage comes as Trump has lobbed broadsides at China over trade, security and other issues. He has railed against what he calls China’s unfair trade policies, and has imposed tariffs on $250 billion of Chinese goods. Beijing has counterpunched, imposing duties on $110 billion in U.S. goods.

“Efforts to resolve the expensive trade war have been bogged down for months. Trump is expected to meet with Chinese President Xi Jinping on the sidelines of a Group of 20 summit in Argentina that begins Nov. 30.

“U.S. officials say Chinese thefts of U.S. commercial software and technology are relentless, growing and hitting on multiple fronts — with hackers penetrating corporate and government email and digital networks, and Chinese operatives recruiting U.S. executives and engineers to spill juicy secrets.” LA Times. Take a good look at the picture above. The stealth fighter on top is America’s F-35, and the one on the bottom, China’s recent comparable J-31. See the similarity? Think that was accidental? Think again!!!Will Xi and Trump figure it out at the next G-20 Summit in Argentina. Who knows?!

Make no mistake, developing nations looking for political and economic models don’t look too fondly at the U.S. democracy anymore. Trump? Polarization and isolation. The U.S. is seen as sliding backwards. China has upgraded the lives of more human beings in the shortest time in history. “China now leads the world in the number of homeowners, internet users, college graduates and, by some counts, billionaires. Extreme poverty has fallen to less than 1 percent. An isolated, impoverished backwater has evolved into the most significant rival to the United States since the fall of the Soviet Union.” New York Times, November 18^th. No free speech, repressive, they steal the patents and secrets without remorse… and they are rich.

I’m Peter Dekom, and there are aspects of Trump’s confrontation with China that really should draw bipartisan support, and perhaps Mr. Pence’s expansion of those challenges should be taken very seriously.