(What’s Left of) Our Economy: U.S.-China Decoupling Help…From China!

Tags

China, decoupling, Didi, Didi Chuxing, finance, investing, IPOs, national security, privacy, stock markets, tech, Wall Street, Xi JInPing, {What's Left of) Our Economy

Here’s an absolutely stunning and potentially crucial development that I sure didn’t anticipate: The Chinese government is emerging as one of the most powerful forces working to decouple the American and Chinese economies.

In fact, Beijing’s recent crackdown on Chinese entities (remember: since China has no free market economic or financial system, these organizations shouldn’t be called “companies” or “businesses”) could rival the tariffs and the technology curbs imposed by the Trump administration and continued by President Biden as a means of (1) reducing America’s dangerous economic reliance on this increasingly hostile rival, and (2) cutting the long-time outflow of valuable U.S. capital and knowhow that inevitable enriches and strengthen the People’s Republic.

This turn of events is so unexpected, because, as I’ve written, finance looms as the one policy front on which decoupling had made the least progress.  Worse, despite the obvious and more subtle threats posed by this trend to individual investors (described insightfully here by investment analyst and friend Steven A. Schoenfeld), not to mention to American security, prosperity, and privacy, the flow of U.S. capital to the People’s Republic kept swelling. So far this year alone, a record $12.5 billion has been raised for Chinese entities on U.S. stock markets in 34 listings – way up from $1.9 billion worth of new listings in 14 deals during the same period last year. And many more seemed on the way.

But don’t think that these numbers come anywhere close to revealing China’s presence in U.S. finance. The kinds of initial public offerings (IPOs) mentioned just above have been appealing to Chinese entities and to the regime because with the U.S. exchanges the world’s biggest by far, passing muster with them is like a Good Housekeeping Seal of Approval. Therefore, it’s inevitably encouraged investors the nation and world over to pile in. As a result, the total market capitalization of these entities stood at no less than $2.1 trillion as of two months ago.

In recent days, however, China has made clear that some national security concerns of its own, along with dictator Xi Jinping’s determination to bring these gigantic, highly advanced organizations closer to heel, were now outweighing the prospect of continuing to attract more oceans of U.S. and other global investment. Just two days after ride-sharing giant Didi Chuxing raised a record $4.4 billion in a June 30 Wall Street debut, Beijing’s internet regulators ordered it to stop signing up users. This past Monday, China ordered that its app be removed from Chinese app stores (as recounted here).  The announced justifications: the need both to protect national security, and users’ personal data. 

But since China’s leaders are not exactly known as champions of personal privacy, the former was surely the real reason, along with the desire to reassert control. Last weekend, in messages presumably endorsed and even placed by Chinese authorities on the Twitter-like platform Weibo, Didi was actually accused of transferring the data it collected overseas.

Since then, moreover, the crackdown has gone beyond Didi. On Monday, China also announced a cyber-security review of two entities also listed in U.S. markets, and The Wall Street Journal reported that Chinese regulators had suggested that Didi postpone its IPO. The following day, Beijing “issued a sweeping warning to its biggest companies, vowing to tighten oversight of data security and overseas listings just days after Didi Global Inc.’s contentious decision to go public in the U.S.”

This news, along with the beatings taken by the share prices of these U.S. listed companies and major counterparts in trading worldwide, have prompted widespread speculation that the Chinese IPO wave in American finance is over, a least for the time being. And almost right on cue, reportedly today a Chinese entity decided to drop its own U.S. IPO plans because of Beijing’s new stance. 

Wall Street of course isn’t happy – huge underwriting and trading fees stand to be lost. But China’s evident change of priorities represents a golden opportunity for U.S. leaders to jump in and lend a helping hand. They should make the regulatory moves needed to keep Chinese entities out of U.S. markets for good going forward, and speed up efforts to kick out those remaining. And as is not the case with other decoupling policies, American officials seemingly can be certain that China’s powerful flunkies in the Washington, D.C. swamp won’t be trying to gum up the works.

Our So-Called Foreign Policy: Why U.S.-China Tech Decoupling Needs to be Kept Simple

Tags

AI, artificial intelligence, Biden, Biden administration, China, decoupling, National Security Commission on Artificial Intelligence, Our So-Called Foreign Policy, tech, technology

“Let’s you and him fight” is about the best expression of cynicism I know of. It’s also often great advice when dealing with a law-of-the-jungle-type situation like world affairs, where advancing your country’s interests without incurring much or any risk is a tactic that’s hard to beat.

As a formula for America’s response to the threat posed by China’s advances in artficial intelligence (AI), though? It’s completely unacceptable because it inevitably results in some portions of the population or the economy or the society or all three making all or most of any sacrifices needed to achieve an important national goal, and others getting off scot free or close to it.

And that’s a big problem with an otherwise very valuable new report from a federal government advisory committee on Chinese progress in this game-changing technology. On the one hand, the authors do a great job in explaining why permitting to narrow America’s lead in AI any further could be disaster for national security and prosperity, and for freedom around the world. As a result, they compellingly argue, grappling with this reality requires “comprehensive, whole-of-nation action.”

On the other hand, although they insist on a massive mobilization of U.S. energy and resources, they also maintain that “The United States can compete against China without ending collaborative AI research and severing all technology commerce.” Not only does this position make no sense whatever, given the Chinese ambitions for AI supremacy the Commission describes and the consequences of Chinese victory. It also means, conveniently, that the U.S. tech sector – from which many of the commissioners come – can keep making big bucks doing business with China.

More fundamentally, though, even if this square-circling policy framework wasn’t so sure to keep lining the pockets of many of the authors, it would still suffer from the intrinsically paralyzing qualities of the idea of “competition” as a guide to or aim for America’s approach to China. Simply put, the idea of competition is simply too complicated.

If you consider this perspective too cynical, or too dogmatic, or both, check out the following from the National Security Commission on Artificial Intelligence:

According to the commissioners, AI is more than “a single technology breakthrough” or even “general-purpose technology.” It nothing less than a “field of fields” that “holds the secrets which will reorganize the life of the world.’” And not surprisingly, “America’s military rivals are integrating AI concepts and platforms to challenge the United States’ decades-long technology advantage. We will not be able to defend against AI-enabled threats without ubiquitous AI capabilities and new warfighting paradigms.”

That’s because “AI applications will help militaries prepare, sense and understand, decide, and execute faster and more efficiently. Numerous weapon systems will leverage one or more AI technologies. AI systems will generate options for commanders and create battle networks connecting systems across all domains.”

Chief among these AI-progressing rivals is China, which the report says “possesses the might, talent, and ambition to surpass the United States as the world’s leader in AI in the next decade if current trends do not change.”

Specicifally, “China sees AI as the path to offset U.S. conventional military superiority by ‘leapfrogging’ to a new generation of technology. Its military has embraced ‘intelligentized war’––investing, for example, in swarming drones to contest U.S. naval supremacy. China’s military leaders talk openly about using AI systems for ‘reconnaissance, electromagnetic countermeasures and coordinated firepower strikes.’ China is testing and training AI algorithms in military games designed around real-world scenarios.”

Nor would Chinese AI superiority pose military threats alone:

“Authoritarian regimes will continue to use AI-powered face recognition, biometrics, predictive analytics, and data fusion as instruments of surveillance, influence, and political control. China’s use of AI-powered surveillance technologies to repress its Uyghur minority and monitor all of its citizens foreshadows how authoritarian regimes will use AI systems to facilitate censorship, track the physical movements and digital activities of their citizens, and stifle dissent. The global circulation of these digital systems creates the prospect of a wider adoption of authoritarian governance.”

Further, its AI push is such a priority for China that it’s determined to succeed by hook or by crook. The Commission reports that Beijing “is executing a centrally directed systematic plan to extract AI knowledge from abroad through espionage, talent recruitment, technology transfer, and investments.” Also crucial to China’s strategy: It “continues to pervasively steal American IP-protected technological advances through varied means like cyber hacking of businesses and research institutes, technological espionage, blackmail, and illicit technology transfer.”

Yet the AI report also observes that “The U.S.-China competition is complicated by the complex web of supply chains, research partnerships, and business relationships that link the world’s two AI leaders. Dramatic steps to sever these ties could be costly for Americans and reverberate across the world. The relationships between American and Chinese academics, innovators, and markets are deep, often mutually beneficial, and help advance the field of AI. Moreover, it remains in the U.S. national interest to leverage formal diplomatic dialogue about AI and other emerging technologies and to explore areas for cooperative AI projects that will benefit humanity.”

Worse, “Broad-based technological decoupling with China could deprive U.S. universities and companies of scarce AI and science, technology, engineering, and mathematics (STEM) talent, sever American companies’ efficient supply chains, and cut off access to markets and capital for innovative firms.”

Therefore, the report expresses confidence that “The United States can compete against China without ending collaborative AI research and severing all technology commerce” and that America’s goal regarding China should be “targeted disentanglement as just one element of its overall approach, which, if applied judiciously to key sectors, can help build U.S. technological resilience, reduce threats from illicit technology transfer, and protect national security–critical sectors.”

The Commission even goes so far as to recommend establishing “a high-level U.S.-China Comprehensive Science & Technology dialogue” that would

>”Identify targeted areas of cooperation on emerging technologies to solve global challenges such as climate change and natural disaster relief; and

>Provide a forum to air a discrete set of concerns around specific uses of emerging technologies while building relationships and establishing processes between the two nations.”

Unquestionably, seeking this balance and these mutual gains is appealing in theory, and it would certainly create the best of all possible worlds for U.S. tech companies that profit hugely from their current business with China and clearly envision much more to come, but whose every existence is threatened by the aforementioned predatory Chinese policies. But there’s no reason to believe that this panglossian result can actually be achieved.

In the first place, the report claims that “China’s campaign to explit U.S.-based research violates the research community’s core principles of integrity, openness, accountability, and fairness.”  That doesn’t sound like a terrific basis for mutually beneficial AI cooperation to me. 

Second, as the Commissioners note, “AI is the quintessential ‘dual use’ technology—it can be used for civilian and military purposes. The AI promise—that a machine can perceive, decide, and act more quickly, in a more complex environment, with more accuracy than a human—represents a competitive advantage in any field. It will be employed for military ends, by governments and non-state groups.”

In effect, they’re acknowledging that even the most seemingly benign AI progress fostered by Sino-American cooperation can and will be used by China for military and other threatening ends. It’s true that the reverse could hold, too. But who’s willing to take the chance that the Chinese would be as generous sharing any knowhow that could be used against it as the United States will be? And who seriously believes that a lobby-friendly Washington could exercise the kind of control over U.S. technologists that the dictators in Beijing will exercise over their Chinese counterparts – assuming that scientists and companies with long histories of enthusiastic voluntary tech transfer to China will end or even curb these activities outside this official dialogue setting?

And above and beyond these dual-use complications, the notion that the United States can successfully compartmentalize its China AI and broader tech policies so precisely and expertly seems bound to create a rerun of America’s approach to date. Even under the Trump administration, the diversity of interests and voices that inevitably shape decisions in a pluralistic, democratic U.S.-style political system kept blurring and otright undermining Washington’s focus. The product has long been much more incoherence and half-at-best-measures than either effective checks on China’s power or strong commitments to the kinds of government- and economy-wide tech promotion that’s rightly urged by this Commission – and by many others before it.

In other words, even years after China’s malign intentions became clear to a critical mass of American political and business leaders, they’ve continued to permit bilateral ties (in the Commission’s words) to be “complicated by [a] complex web of supply chains, research partnerships, and business relationships….” In turn, that’s the main reason why, to quote the report again, “The U.S. government is not prepared to defend the United States in the coming artificial intelligence (AI) era.”

In a previous post, I criticized the Biden administration for describing the U.S.-China relationship as a competition because the term is

“so intrinsically ambivalent (especially in the realm of world affairs) that its much likelier to confuse than to provide useful policy guidance. In addition, competition is a concept that evokes the playing field, where both victory and defeat have ultimately trivial consequences, rather than the fundamentally anarchic and much more dangerous international landscape. Consequently, its use tends to downplay even stakes otherwise defined more threateningly.”

This AI report greatly adds to the evidence that treating America’s dealings with China as a competition (including President Biden’s latest version: an “extreme competition”) can only lead Washington down a dangerous dead-end. It’s effectively contending that, even though China literally is seeking the United States’ defeat and domination, it’s still interested in helping Americans cure cancer or save the world from climate change, and that therefore current U.S. policy need only a large number essentially tweaks to keep safeguarding national security and prosperity adequately. And it assumes that American policymakers are skilled enough to achieve the needed “calibration” of rivalry and cooperation. (Watch this term turn into a favorite of U.S. officials and pundits – especially the globalists – going forward.)

I’m much more impressed with former boxing champion Mike Tyson’s observation that “Everybody has a plan until they get punched in the mouth.” In other words, what looks great on the drawing board – or on the word processor – tends to fall apart when it confronts reality.

The lesson to be learned isn’t that planning and strategizing isn’t necessary. Instead, it’s that particularly in high-stakes situations, the conceptually simplest plan will likely be the best. When it comes to the China challenge, including  artificial intelligence interactions between the two countries, that means spending much less time trying to thread needles, and more time figuring out how to shut down the transfer of superior U.S. knowhow to China as completely as possible.

(What’s Left of) Our Economy: Too Little China Realism Too Late from the U.S. Chamber

Tags

China, Daniel Rosen, decoupling, economics, investment, national security, Rhodium Group, Trade, U.S. Chamber of Commerce, {What's Left of) Our Economy

The U.S. Chamber of Commerce has just released a report warning of the high costs of any efforts to decouple the American economy from China’s completely. That’s not especially big news: The Chamber has long campaigned for closer trade and investment ties with the People’s Republic, which until very recently have been clearcut boons to the bottom lines of the multinational companies that run this premier American business organization.

What is big news is that the Chamber hasn’t come out against decoupling as such. Far from it, and that’s noteworthy. But the report, and the China record of groups like Chamber, also reenforce the importance of asking and answering a big question about U.S. strategy toward this increasingly wealthy, powerful, and hostile Asian giant that American political leaders and news organizations keep energetically ducking.

First, though, the report’s overall conclusion deserves highlighting. According to principal author Daniel Rosen, an analyst with a consulting firm called the Rhodium Group, “U.S.-China engagement was always contingent on shared liberal economic goals. As Beijing diverges back toward greater state planning, a less permissive stance is necessary. But our self-interest lies in purposeful decoupling, not a gratuitous pulling apart. This study is a step toward re-sizing our engagement rationally.”

These points matter because despite the Chamber’s claim that it’s “long advocated for a balanced and rational approach to commercial relations with China,” especially when key decisions were being made, it’s consistently described the choices faced by Americans in the crudest either-or terms possible. As one of its members told a Congressional hearing in 2000, as the nation was debating the landmark question of whether to accept China’s entry into the World Trade Organization (WTO), “We have a simple choice to make. We can either embrace and profit from China as a trading partner, or stick our heads in the sand and hope they go away.”

Yet however welcome the Chamber’s new acknowledgement that greater Sino-American economic integration and trade, investment, and technology flows aren’t always net winners for the United States, it’s troubling that the study chose to focus on the economic downsides of “complete disengagement” and “full decoupling” from China. For any change of the kind is many years away at best, and no major voices have recommended that it be accomplished immediately.

Further, the report’s overarching assessment that “the costs of anything approaching ‘full’ decoupling are uncomfortably high” is torpedoed by an analytical framework that the Chamber itself admits is woefully deficient practically across-the-board.

For example, readers early on will learn that “because of the many variables at play, it is beyond the capacity of economics to deliver a precise answer regarding the costs of decoupling” and that the report’s “estimations are derived from economic models of ‘normal’ before the COVID-19 pandemic; the macroeconomic assumptions about future supply and demand that such models depend on must now be viewed with great skepticism.” The honesty is refreshing, but also casts doubt on the point of the entire exercise, as it’s a high-falutin’ way of saying “Garbage in, garbage out.”

A closely related flaw: Nowhere does the study look at the counterfactual – that is, the impact on the U.S. economy of maintaining the degree of decoupling that’s been achieved already, or of expanding it on the margins. This failure is especially serious since the Chamber itself agrees that decoupling has long been high Chinese priority – at least since 2006, when Beijing (formally) announced an “indigenous innovation” policy that (in the Chamber’s words) sought to “reduce reliance on foreign technology.”

The Chamber also admits that its analyses “explore only the economic welfare effects: they do not attempt to price in the costs or benefits to U.S. security, which is a critical factor in the rethink of engagement with China.” But enhancing national security in all of its dimensions – including the supply chain vulnerabilities highlighted by the pandemic in medical goods of all kinds, and by Intel’s loss of the global lead in semiconductor manufacturing knowhow in the information technology sector – is, as the authors write, “a critical factor in the rethink of engagement with China.”

No one with a brain in their head would insist that no economic costs will be incurred from significant decoupling. (And yes, in this vein, former President Trump was wrong to boast that when it comes to countries running big surpluses with the United States, “trade wars are” both “good and easy to win.”) It’s the nature of the tradeoffs that now most urgently needs careful examination.

These problems in turn lead to the big question mentioned above. Every American whether acting on their own or in groups has every right to participate in the China policy debate. But the supporters and opponents of ever greater engagement have been vying for decades now, and having been a leader of the former, the Chamber ranks prominently among the losers on the substance. Why, therefore, since the organization and its allies have been so behind the curve for so long, should their input deserve much credibility today?

Sure, as made clear by the Chamber report and the China policy shift seen throughout the mainstreams of the American business, political, and policy communities (at least rhetorically), some learning has taken place. But where’s the evidence that the engagers’ views and instincts are any on target and more valuable in this new environment than they were in years past, when they steered American policy so incompetently, and in fact largely created the current danger? The positions they back today might have worked had they been put into effect before China became such an economic, technological, and military force. But now that the damage has been done, why believe that they’ll suffice now?

At the least, the engagers should face the burden of explaining why their abysmal record over so many years still entitles them to a serious hearing. And it’s even more reasonable to assume that if the likes of the Chamber are backing limited decoupling nowadays, the best course for America is pursuing this goal even  more aggressively and comprehensively.

Making News: China Policy Blueprints Critique Re-Posted in The National Interest

Tags

alliances, allies, Asia, Biden, CCP, China, China Strategy Group, Chinese Communist Party, decoupling, Donald Trump, Making News, multilateralism, NationalInterest.org, sanctions, semiconductors, Silicon Valley, supply chain, tariffs, Trade, trade war, XiJinping

I’m pleased to announce that The National Interest has republished as a single article my recent blog posts detailing the major flaws of two blueprints for China policy that have just been offered to the Biden administration from establishment thinkers. In case you missed them the first time around, or want to re-read, here’s the link.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

Our So-Called Foreign Policy: Why Scalpels Won’t Cut it Against China

Tags

Biden, China, China Strategy Group, decoupling, Donald Trump, Eric Schmidt, EU, European Union, FDI, foreign direct investment, Germany, Google, health security, Made in America, manufacturing, multilateralism, national security, Our So-Called Foreign Policy, semiconductors, Silicon Valley, supply chain, Taiwan, technology

Yesterday’s RealityChek post argued made clear that one of the two recent blueprints for China policy offered to President Biden from the foreign policy and technology establishments suffered from crippling internal contradictions.

The second effort, from the Silicon Valley-dominated “China Strategy Group,” can be read more profitably by the President, because popping up here and there are some insights that are genuinely valuable especially since they come from analysts once strongly supportive of what they themselves call the pre-Trump strategy of “near-unbounded integration.”

Principally, the group, which notably is co-chaired by Google co-founder Eric Schmidt, calls for recognizing that “some degree of [U.S.-China] disentangling is both inevitable and preferable. In fact, trends in both countries—and many of the tools at our disposal—inherently and necessarily push toward some degree of bifurcation.” In other words, it’s endorsed a limited version of what’s now commonly called economic and technological decoupling.

In addition, it argues that both this decoupling, along with tariffs that it acknowledges may be needed to push back against certain Chinese offenses and provocations, should be pursued even though they will entail costs – a refreshing and crucially important departure from the long-time pre- and post-Trump consensus in the mainstream American political, business and policy communities that any increased consumer or producer price, or loss of even a smidgeon of market share in China resulting from retaliation from Beijing, proves conclusively the folly of placin any significant curbs on doing business with the People’s Republic.

Finally, the group points out that efforts to rebuild domestic supply chains to reduce reliance on China for critical goods must involve “more than a focus on the end products. Safeguarding key technologies requires the United States to define and secure the entire ecosystem of production, from fabrication to supply to talent to cutting-edge innovation.” In other words, Washington can’t simply seek to become self-sufficient, or largely so, in face masks or ventilators or semiconductors. It needs to become self-sufficient or largely so in all the materials, parts, and components required to make these products.

Yet many of these important insights (and useful recommendations for restructuring the U.S. government to foster the competition with China more effectively) are kneecapped by equivocation and a resulting failure to understand that sometimes policy scalpels cut too finely, and some policy needles are too small to be threaded – especially considering the “all of society” drive China’s totalitarian system is making to gain global technology leadership, and the dangers to America’s “security, prosperity, and way of life” Chinese success would create.

For example, the group emphasizes that decoupling policy mustn’t invite “escalatory cycles of confrontation, retaliation, or unintended conflict” or overlook those areas “where cooperation, collaboration, and exchange with China is in our interest, as severing ties and closing off the United States to the ideas, people, technologies, and supply chains necessary to compete effectively will undermine U.S. innovation.” At the same time, the authors acknowledge that China will respond to any further U.S. decoupling moves “more aggressively” precisely because “China’s leaders understand U.S. dependency as an important source of leverage.”

So although in principle, this omelet can be made without breaking many eggs, Beijing won’t be cooperating in fact. And the circle can’t be squared with clever phrase-making like “navigating the asymmetric competition” that look satisfactorily reassuring on paper and in speeches to conferences but that need to survive the body blows that will inevitably be delivered by reality.

The group’s approach to Chinese investment in the United States (whether in the form of creating new businesses or taking over or contributing capital to existing firms) illustrates the other big drawback of granular approaches when it comes to China: They ignore how any Chinese entity big enough to play in any foreign market, and especially America’s, is under Beijing’s thumb in every important respect.

As a result, there’s no point in taking the time and expending the resources to follow the group’s recommendations to figure out which Chinese tech platforms (whose importance it emphasizes) are and are not violating American privacy standards or conducting misinformation campaigns dangerous to democracy, or censoring content Chinese authorities don’t like, or helping suppress human rights in China or anywherer else, or stealing valuable data, or helping terrorists and criminals launder money; or whether these activities matter enough to merit official U.S. attention, or whether troublesome practices can be negotiated away through talks with Beijing on technical and other fixes.

In this instance, Washington should stay out of the black holes of setting priorities and especially monitoring and enforcing agreements, and assume that by simply banning these platforms from operating in the United States and in fact prohibiting all Chinese entities from owning U.S. hard assets. The latter step would add the benefit of shielding participants in America’s economy from competition with subsidized, market-distorting outfits from China. At the very least, Chinese entities should be required to prove that they’re not controlled or subsidized in any way by Beijing, or engaged in the above malign activities, before gaining entry.

In addition, despite the group’s understanding that entire manufacturing eco-systems, not just final products, need to be rebuilt and nurtured to ensure supply chain security, it appears to underestimate just how widely these relationships extend. After all, most of the numerous inputs to goods like mechanical ventilators (like its controls, power sources, monitors, and alarm systems) depend on big and complex supply chain and manufacturing eco-systems themselves.

Further, just as before the pandemic, few expected face masks and surgical gloves to become products vitally important to the nation’s well-being, the list of critical goods is likely to change and grow over time as new threats emerge. Therefore, the group is correct in warning that “any product or service could be termed essential to national security in an extreme hypothetical.” But what’s the basis for confidence that many products or services can safely be ruled out, and that such hypotheticals will always remain extreme?

At least as important, like the Biden administration, the group’s determination not to ruffle too many international feathers has also clearly led it to back the notion that the definition of “Made in America” for supply chain purposes should actually mean, “Also Made in Lots of Other Countries” that it considers trusted suppliers. Unfortunately, many of the countries so classified imposed export controls on critical medical goods during the pandemic’s first wave last spring. That is, when cooperation was most needed, they built walls – meaning that their trustworthiness isn’t exactly ironclad.

And as then President-elect Biden learned when the European Union rebuffed his entreaty to consult with Washington before signing an investment agreement with China, the allies remain determined to fence sit in the U.S.-China technology competition. The group acknowledges that the list of anti-China partners “may include all of the [European Union], though in some cases EU position/member states’ positions are too ambiguous today with respect to China for inclusion in all instances, and members may need to be considered on an individual basis.” But simply stating this position and its EU-splitting ambitions is enough to make clear its absurdity – especially since the EU country most reluctant to cooperate against China is economic kingpin Germany.

None of this is to say that all trade with (as opposed to investment in hard assets from) China should be cut off completely, or that international cooperation can be of no use to the United States in its struggle versus the People’s Republic. In particular, (and due largely to recklessly indiscriminate free trade policies), America urgently needs products and knowhow now dominated by foreign producers (notably Taiwan’s semiconductor manufacturing industry, and Japanese and Dutch suppliers of key microchip production equipment and materials). And if other countries are willing to cooperate with Washington on various China containing initiatives at acceptable prices, more help is indeed better than less. But the United States will never safeguard its interests adequately without realizing that multilateralism can’t be an end in and of itself, and that against monumental threats, axes are usually more effective than scalpels.

Our So-Called Foreign Policy: “Anonymous” Inanity on China

Tags

Atlantic Council, Biden, China, China Strateg Group, decoupling, Donald Trump, Foreign Affairs, George F. Kennan, globalism, Iran, Our So-Called Foreign Policy, The Long Telegram, The Longer Telegram, X Article, Xi JInPing

How lucky for President Biden that, just as he’s announced a wide-ranging review of U.S. China policy (after he and his supposedly fellow foreign policy mavens spent the entire presidential campaign lambasting Donald Trump’s initiatives and clearly conveying that they knew exactly how to fix these alleged blunders), a wavelet of advice has appeared offering answers, at least at the broad brush level.

How unfortunate for the United States, though, that so little of this advice has any prospect of advancing and defending American interests vis-a-vis China, much less improving on the Trump efforts to neutralize the China threat. In fact, if Mr. Biden follows his longstanding Beijing-coddling instincts and generally heeds the authors, the United States is bound to become more vulnerable and more beholden to the People’s Republic than ever.

Two blueprints for the President to follow have emerged in recent weeks: a memo from an anonymous author who clearly views him or herself as a latter day George F. Kennan; and a collective effort from a “China Strategy Group” dominated by Silicon Valley figures (and co-chaired by Google co-founder Eric Schmidt). The first is the most easily disposed of, and will be the subject of today’s post. Tomorrow I’ll discuss the Group’s China grope.

Kennan, in case you’ve forgotten, was the mid-twentieth century American diplomat whose analyses of Soviet power and behavior (including an early 1946 memo written during his stint in Moscow that became known as “The Long Telegram”) powerfully shaped the Cold War strategy of containment adopted by Washington. He was by no means perfect, but in my view amply deserves his reputation as one of the most incisive foreign policy analysts in American history – which is why if he read the new and arrogantly titled “The Longer Telegram,” he’d probably be hard-pressed to decide whether to laugh or cry.

The most eye-catching proposal made by the author (whose desire for anonymity apes that displayed Kennan in a 1947 article that grew out of “The Long Telegram” that he published in the journal Foreign Affairs as “X”): urging that rather than focus on broadly changing China’s totalitarian system of government and control over the economy, or targeting the Chinese Communist Party (CCP) in particular as Public Enemy Number One, U.S. policy recognize Chinese leader Xi Jinping and his inner circle as the dominant game changer that has turned the People’s Republic and its practices from a “manageable” challenge into today’s mortal danger not only to the United States but to the entire world.

I actually agree with the author that prompting Chinese reform of any kind is a fool’s quest – a prime reason that I regard substantially decoupling America’s economy from China’s as the best way to ensure that the nation can handle whatever problems Beijing creates. It was also heartening to see “Anonymous” recognize that dealing with China successfully will be that much harder for Washington if it keeps going out of its way to demonize Russia – which has clearly become a Democratic Party staple.

But concentrating U.S. China policy “through the principal lens of Xi himself” and seeking to capitalize on “significant” opposition within the CCP to “Xi’s leadership and its vast ambitions” in order to “return [China] to its pre-2013 path—i.e., the pre-Xi strategic status quo” suffers from at least two glaringly obvious flaws.

The first is Anonymous’ belief that however numerous China’s challenges to U.S. interests before Xi gained control, “they were manageable and did not represent a serious violation of the US-led international order.” In fact, even the author him/herself doesn’t seem to believe this.

If he or she did, why admit that the current Chinese challenge, “to some extent, has been gradually emerging over the last two decades”? And that that “China has long had an integrated internal strategy for handling the United States….” And that pursuing its goals “nationally, bilaterally, regionally, multilaterally, and globally….has been China’s approach for decades.” And that “What links” today’s China threat and that posed by the Soviet Union in particular during the early Cold War is that “the CCP, like the former CPSU [Communist Party of the Soviet Union], is an avowedly Leninist party with a profoundly Marxist worldview”?

Have Xi’s ambitions magnified the threat? Of course. But – as Anonymous also admits – not because Chinese leaders’ goals have fundamentally changed, but because growing economic and therefore military strength have brought them within reach.

In the author’s own words,

“China has undergone a dramatic economic rise in recent decades, and it is using its economic power to engage in coercive practices and to become the center of global innovation….China is transforming its economic heft into military strength, modernizing its military and developing capabilities to counter the United States’ ability to project power in the western Pacific.”

And although China has generated much of this impressive progress through its own devices, it’s also indisputable that its closely related economic, technological, and military advances stem from the U.S. and other free world resources and knowhow that flooded into China precisely when the bipartisan Washington consensus viewed any possible dangers emanating from Beijing as “manageable.” In other words, whether knowingly or not, Anonymous in effect is arguing for a return to the policies that helped create the problem he’s (correctly) identified. And P.S. Since he or she is described as “a former senior government official with deep expertise and experience dealing with China,” chances are the author had more than a minor hand in crafting this failed approach.

The second fatal flaw in “The Longer Telegram” is its assumption that American foreign policymakers understand enough “about the fault lines of internal Chinese politics” to manipulate them into bringing back those allegedly manageable pre-Xi leaders. To which anyone with even the skimpiest knowledge of American diplomacy should be responding, “Remember Iran.”

For since that country’s 1979 revolution replaced a generally pro-American monarch with a zealously anti-American Shiite Islamic theocracy, U.S. leaders have tried repeatedly to find influential moderates that would help reshape the new regime’s behavior. Because the United States knew so little about the internal politics and fault lines of this leadership, all these efforts have failed. Does Anonymous really believe that Washington’s knowledge of China’s even more secretive leadership is any better?

The Atlantic Council, the globalist Washington, D.C. think tank that published “The Longer Telegram,” calls it “one of the most insightful and rigorous examinations to date of Chinese geopolitical strategy and how an informed American strategy would address the challenges of China’s own strategic ambitions.”

Actually, its signature recommendation is so internally contradictory and naive that I don’t blame the author for wanting to stay Anonymous.

(What’s Left of) Our Economy: U.S. and Other Foreign Investors Keep Funding the China Threat

Tags

bonds, China, decoupling, delisting, FDI, Financial Times, foreign direct investment, investment, Joe Biden, pension funds, Phase One, portfolio investment, Steven A. Schoenfeld, stock markets, stocks, Trade, trade surplus, Trump, Wall Street, {What's Left of) Our Economy

Here’s one of the most depressing articles I’ve read in a long time, and it deals with a (big) piece of U.S.-China economic relations to which I haven’t paid enough attention so far:  flows of financial investment.

It’s depressing because it shows that, although the Trump administration has (rightly, in my view) begun to decouple America’s economy from China’s, and made impressive progress in trade and foreign direct investment (purchases of “hard assets,” like factories and labs and enterprises and real estate), portfolio investment (purchases of stocks and bonds) into China from around the world is not only continuing – it’s booming. And these capital flows, including resources from Americans, are already much bigger than direct investment flows and are  rapidly approaching even the mammoth scale of trade flows.

According to this Financial Times piece, in total, investors outside China this year have bought about $150 billion worth of Chinese stocks and bonds – including Chinese government bonds. (Not that the debt of Chinese entities practically speaking differs fundamentally from national and local Chinese government debt, since there’s no private sector worthy of the name in China.)

The Financial Times reports that the vast majority of these inflows are bond purchases, meaning that investors outside China are lending to all manner of borrowers inside the People’s Republic. But buys of stocks in the Chinese entities commonly and misleadingly described as “companies” that presumably closely resemble their counterparts in genuine free market systems matter as well, because they, too, make new resources available to the Chinese regime. And after suffering from net outflows earlier this year, when Beijing locked down much of the country’s economy after the CCP Virus broke out, Chinese stocks are enjoying net inflows once again.

Moreover, China is starting to enjoy this foreign capital windfall just as its own ability to generate the savings needed to finance the huge debts that have fueled the latest phase of its ongoing economic expansion has begun weakening. Indeed, the need to replace faltering domestic capital sources with foreign capital is exactly what’s behind Beijing’s recent spate of decisions to reduce the barriers to overseas investing in China’s financial markets.

Foreign purchases of Chinese financial assets are still dwarfed by China’s global trade surplus (i.e., its profits) this year, which stands at just under $500 billion through November. But they’re now twice as great as global direct investment in China (about $115 billion through October, Beijing reports).

Obviously, the Trump administration can’t directly control non-U.S. foreign investment into China. But capital coming from the United States hasn’t exactly been chump change. I haven’t been able to find official data, but Steven A. Schoenfeld of the investment research and advisory firm MV Index Solutions, who has been investigating this issue for several years, has written that, in 2019, “nearly $400 billion of new foreign investment into Chinese equities was driven by changes in allocations within benchmark indexes, with American investors accounting for more than a third of these massive portfolio flows.” In addition, he has estimated that the 30 largest U.S. public workers’ pension plans had invested more than $50 billion in Chinese entities as of the beginning of this year. (Full disclosure: Steven is a long-time close personal friend.)

The Trump administration belatedly has tried to curb American portfolio investment in China, and has both forced a big federal workers’ pension fund to halt a planned great increase its China holdings, and has ordered a ban on all U.S. financial investment in dozens of companies linked to the Chinese military.

But unless more comprehensive curbs are enacted, the decisions by Wall Street research firms to boost China’s presence in the stock indices they construct, and which both government pension and private fund managers generally try to track, will still ensure that these investors’ exposure to China keeps rising. And the lure of expanded opportunities in China’s already huge and potentially huge-er financial services market, and its still healthily growing real economy, will continue fueling American and other foreign investors’ appetite for both Chinese stocks and bonds. Ironically, the President’s Phase One trade deal could help sustain and even increase U.S. investments in China via the commitments China has made to ease barriers to entry for American finance companies.

In fact, Steven Schoenfeld’s research makes clear that overall, despite these Trump administration curbs, total foreign holdings of Chinese stocks and bonds could approach and even exceed the half trillion dollar level in the next two or three years. These sums would equal several percentage points of China’s total economy.

Nor does the foreign financial support for China stop there. Although the Trump administration and Congress have been working to tighten the standards Chinese entities must meet to list on U.S. stock exchanges, their presence in the three biggest such financial markets as of October had allowed them to achieve total market capitalization of $2.2 trillion.

Of course, the Trump years seem to be nearing a close, raising the question of whether apparent President-elect Joe Biden will try to tighten the clamps on U.S. capital flows further and even encourage American allies to do the same, or whether he’ll simply let current trends continue, or open the flood gates further.  Something we do know for sure:  Investors in Chinese markets seem awfully confident that Washington will let them continue with their version of selling Beijing the rope with which it can hang the free world.  Why else would Chinese stock prices be way up since his apparent election? 

Our So-Called Foreign Policy: Biden Choices Signal a “What, Me Worry?” China Policy

Tags

alliances, allies, Antony Blinken, BlackRock, Brian Deese, China, decoupling, Jake Sullivan, Janet Yellen, Joe Biden, Katherine Tai, Lloyd Austin, multilateralism, national security, Our So-Called Foreign Policy, Robert Lighthizer, sanctions, tariffs, tech war, Trade, trade war, transition, Trump, U.S. Trade Representative, USTR, Wall Street

Apparent President-elect Biden so far is sending a message about his China policy that’s unmistakably bad news for any American believing that the People’s Republic is a major threat to the nation’s security and prosperity – which should be every American. The message: “I’d rather not think about it much.”

In some limited senses, and for the very near future, the impact could be positive. Principally, although he blasted President Trump’s steep, sweeping tariffs on imports from China as disastrously counter-productive for the entire U.S. economy – consumers and producers alike – he’s stated that he won’t lift them right away. Presumably, he’ll also hesitate to remove the various Trump sanctions that have so gravely damaged the tech entities whose activities bolster China’s military strength and foreign espionage capabilities, along with new Trump administration restrictions on these Chinese entities’ ability to list on U.S. stock exchanges.

Looking further down the road, however, if personnel, as widely believed, is indeed policy, Biden’s choices for Cabinet officials and other senior aides to date strongly indicate that his views on the subject haven’t changed much from this past May, when he ridiculed the idea that China not only is going to “eat our lunch,” but represented any kind of serious competitor at all. In fact, in two ways, his choices suggest that his take on China remains the same as that which produced a long record of China coddling.

First, none of his top economic or foreign policy picks boasts any significant China-related experience – or even much interest in China. Like Biden himself, Secretary of State-designate Antony Blinken is an indiscriminate worshipper of U.S. security alliances who views China’s rise overwhelmingly as a development that has tragically and even dangerously given Mr. Trump and other America Firsters an excuse to weaken these arrangements by making allies’ China positions an acid test of their value. In addition, he’s pushed the red herring that the Trump policies amount to a foolhardy, unrealistic attempt at complete decoupling of the U.S. and Chinese economies.

As for the apparently incoming White House national security adviser, Jake J. Sullivan – who served as Biden’s chief foreign policy adviser during his Vice Presidential years – he shares the same alliances-uber-alles perspective on China as Biden and Blinken, and is on record as late as 2017 as criticizing the Trump administration for “failing to strike a middle course” on China – “one that encourages China’s rise in a manner consistent with an open, fair, rules-based, regional order.” I’m still waiting for someone to ask Sullivan why he believes that mission evidently remained unacccomplished after the Obama administration had eight years to try carrying it out.

On the defense policy front, Biden has chosen to head the Pentagon former General Lloyd Austin whose main top-level experience was in fighting Jihadist terrorists in the Middle East, not dealing with a near-superpower like China. That’s no doubt why Biden failed even to mention China when introducing Austin and listing the issues on which he’d need to focus – an omission worrisomely noted by the U.S. Asia allies the apparent President-elect is counting on to help America cope more effectively with whatever problems he thinks China does pose.

As for the Biden economic picks, Treasury Secretary and former Fed Chair Janet Yellen has expressed little interest in China or trade policy more broadly during her long career in public service. (See here for a description of some of her relatively few remarks on the subject.) His choice to head the National Economic Council, Brian Deese, has been working for the Wall Street investment giant, BlackRock, Inc. – which like most of its peers has long hoped to win Beijing’s permission to compete for a slice of the potentially huge China financial services market. But his focus seems to have been environmentally sustainable investments, and his own Obama administration experience centered on climate change.

One theoretical exception is Katherine Tai, evidently slated to become Biden’s U.S. Trade Representative (USTR). Both as a former lawyer at the trade agency  and in her current position as a senior staff member at the House Ways and Means Committee, she boasts vast China experience.

But history teaches clearly that the big American trade policy decisions, like handling China, are almost never made at the USTR level. Mr. Trump’s trade envoy, Robert Lighthizer, was a major exception, and his prominence stemmed from the President’s unfamiliarity as an outsider with the specific policy levers that have needed to be pulled to engineer the big China trade and broader economic policy turnaround sought by Mr. Trump. So expect Tai to be a foot soldier, nothing more.

The cumulative effect of this China vacuum at the top of the likely incoming administration creates the second way in which Biden’s seems to reflect a lack of urgency on the subject: It signals that there will be no China point person in his administration. It’s true that reports have appeared that the apparent President-elect will appoint an Asia policy czar. But more than a week after they’ve been posted, nothing further has been heard.

All of which suggests that, by default, China policy will be made by the alliance festishers Blinken and Sullivan. And if their stated multilateralist impulses do indeed dominate, the result will be basically a U.S. China policy outsourced to Brussels (headquarters of the European Union), and the capitals of Asia. As I’ve written previously, many of these allies have profited greatly from the pre-Trump U.S. and global China trade policy status quo, and their leaders are hoping for a return to this type of world as soon as possible. And it’s no coincidence that’s the kind of world Joe Biden was happy to help preside over during his last White House job.  

Our So-Called Foreign Policy: Biden Multilateralism Looks Ever More Muddled

Tags

alliances, Antony Blinken, Biden transition, China, decoupling, globalism, international institutions, Jake Sullivan, Joe Biden, multilateralism, Our So-Called Foreign Policy, technology

Attention to anyone in touch with the Biden foreign policy transition folks – I’m offering a deal.

I’ll stop charging that its top members (and especially Cabinet and similar nominees) keep spouting patently and dangerously vapid globalist foreign policy ideas if they provide some evidence that something other than patently and dangerously vapid globalist foreign policy ideas are going to shape their upcoming stewardship of American strategy and diplomacy.

So far, however, the evidence keeps showing that they have a long way to go, starting with Secretary of State nominee Antony Blinken. In his remarks accepting the position (subject to Senate confirmation of course), this quintessential Clinton and Obama administration retread spoke movingly about his family’s Holocaust roots, but committed one of the cardinal sins of not only diplomacy but any policymaking or politicking: He advertised weakness.

On top of failing either to mention or – more likely – recognize that the international cooperation and multilateralism that’s he’s elevated from a foreign policy tactic to a goal in and of itself will inevitably have content, and that therefore America will often need to play hardball in order to ensure favorable outcomes, Blinken emphasized that “as the President-elect said, we can’t solve all the world’s problems alone. We need to be working with other countries. We need their cooperation. We need their partnership.”

It was nothing less than an open invitation for U.S. friends, foes, and neutrals alike to assume that such problem solving efforts matter more to the United States to them, and that they can therefore repeatedly roll Washington by playing hard to get, and often simply stonewalling until the United States caves in to their stances.

And if you think that America’s wealthy, powerful, and influential allies, whose agreement will be rucial to the success of any international cooperative efforts, would never sink to these tactics, you need to learn some Cold War history. Even when the free world faced a Soviet threat that all of its members viewed as existential, countries like (then) West Germany and South Korea, which literally lived on the front lines, successfully free-rode for decades on Washington’s defense guarantees because U.S. leaders continually spoke and acted as if they’d maintain these military (including nuclear) umbrellas at all costs because they were vital to America itself.

To make matters even weirder, shortly before the election, Blinken – the fetishizer of international cooperation and multilateralism — justified these globalist priorities with an argument drawn straight from the very foundation of America First-ism, at least as I’ve defined it.

I’ve written that America First is the foreign policy approach most suited to the United States is one understanding that, although the United States is not strong, rich, and or smart enough to create a benign global environment or meet truly global challenges all by itself, it is plenty strong, rich, and smart enough to remain safe and prosperous in a world sure to stay anything but benign.

So imagine how surprised I was to see this Blinken statement at a foreign policy conference in October, when he was firmly established as a leading Biden spokesman: A new administration’s approach to world affairs would include “humility, because most of the world’s problems are not about us, even though they affect us.”

Now there’s nothing inherently wrong with addressing overseas situations that “affect us,” as opposed to representing mortal threats. If opportunities arise for the United State to better its lot, it’s of course reasonable to pursue them. But they shouldn’t be pursued until U.S. leaders ask themselves whether the best way to achieve such goals is by joining international cooperative efforts, or relying on any foreign policy approaches at all, rather than trying to build up its own capabilities and reducing its own vulnerabilities. As I’ve also written, in many instances, the latter, America First-y approach will be the superior or more promising, if only because the nation will always be able to influence its own affairs much more effectively than the affairs of others.

Finally, even when Biden aides do display some awareness that U.S. foreign policy needs to be something more than a content-free quest for cooperation, regardless of the stakes for Americans, they haven’t made much progress on figuring out what this content should be – or sharing the results with the public.

More than a year ago, the apparent President-elect’s choice for White House national security adviser, Jake Sullivan, wrote in the leading journal Foreign Affairs, that the central task of U.S. China policy must be to find a way to establish a modus vivendi with Beijing recognizing that the People’s Republic is here to stay as a great power. He stated that “Such coexistence would involve elements of competition and cooperation,” which sounds like yet another glib formula for emphasizing means over end. But Sullivan did specify that America’s policies must identify and seek outcomes favorable to U.S. interests and values.”

On broader matters, Sullivan even contended that “Going forward, Washington should avoid becoming an eager suitor on transnational challenges. Eagerness can actually limit the scope for cooperation by making it a bargaining chip.” Hopefully, he’ll communicate this “Don’t advertise weakness” to Blinken and the rest of a Biden administration.

So that’s progress. But in the year that’s passed since this piece came out, we’ve heard little from Sullivan or anyone else connected with Biden on what will be acceptable to a new adminstration and what won’t be, and less in the way of plausible tactics for achieving these goals or creating these conditions.

For example, Sullivan’s description in his article of ways to deter a Chinese attack on Taiwan – or other targets in Asia – demonstrates no awareness that Beijing’s ability to hit the U.S. homeland with large numbers of nuclear weapons looks formidable enough to inhibit conventional American military responses strong enough to threaten Chinese gambits with defeat.

Sullivan allows that Washington will need to use “some enhanced restrictions on the flow of technology investment and trade in both directions,” in order to “safeguard its technological advantages in the face of China’s intellectual property theft, targeted industrial policies, and commingling of its economic and security sectors.”

But because Sullivan’s overarching goal appears to be avoiding the “Balkanization” of “the global technology ecosystem by impeding flows of knowledge and talent,” he’d place limitations on these curbs that would result in a piecemeal response to a systemic threat. And even individual restrictions that are approved would surely be watered down to the point of ineffectiveness thanks to Sullivan’s insistence that they be “undertaken in consultation with industry and other governments” – two groups that have displayed not the slightest inclination significantly to disrupt business with China that they’ve each found tremendously lucrative.

And in fact, Sullivan ends up ignoring his own sage advice about the limits of international cooperation and multilateralism for their own sakes by declaring a faith in their capabilities that looks stubbornly blind. Why else would he end his article with these declarations?

“Establishing clear-eyed coexistence with China will be challenging under any conditions, but it will be virtually impossible without help. If the United States is to strengthen deterrence, establish a fairer and more reciprocal trading system, defend universal values, and solve global challenges, it simply cannot go it alone. It is remarkable that it must be said, but so it must: to be effective, any strategy of the United States must start with its allies.”

Which sounds like we’re back to Blinken-ism. With my offer still firmly on the table.

(What’s Left of) Our Economy: Are Businesses Closet Techno-Nationalists?

Tags

CCP Virus, China, coronavirus, COVID 19, decoupling, General Electric, globalization, innovation, nationalism, tech, technology, Wuhan virus, {What's Left of) Our Economy

Even if these poll findings are as off as many of the surveys of the 2020 election vote were, they’d still be pretty astounding. After years of multinational companies all over the world (including and perhaps especially in the United States), proclaiming that promoting innovation requires ever greater cooperation with partners across borders, General Electric’s (GE) latest annual survey of business views on the subject turned up strong support for what it calls a protectionist perspective.

It’s definitely something to keep in mind the next time you hear the China-coddling corporate Offshoring Lobby insist that a major U.S. economic decoupling from the People’s Republic would cut America off from an increasingly important source of technological progress, or the Open Borders-friendly Cheap Labor Lobby claim that restricting the inflow of foreign technology workers would deny them and the national economy as a whole access to many of the world’s best talent.

GE has been conducting these studies since 2011, and this year has looked at the subject twice – in January and September. In toto, the views of corporate innovation executives from 22 countries ranging from Kenya to the United States were sampled. (The January poll reported results from 22 countries and the September follow up from ten.)

Among the most startling results:

>This past January, fully 66 percent of the U.S. executives who responded considered that the country is “self-sufficient, and does not need to rely on other countries to innovate.” By September, this figure had climbed to 78 percent.

>In China, the comparable figures were 56 percent and 52 percent, respectively – meaning that, at least according to this GE study, China’s confidence in its technological autonomy has declined.

>Going global, in September, 69 percent of respondents reporting that their national governments had become more techno-protectionist in the last six months said that these policies had “a positive impact on innovation.” Viewed from the opposite end of the policy spectrum, only 41 percent of respondents reporting that their national governments had become less protectionist during this period considered this shift to have benefited innovation.

>In September, nearly all (94 percent) of the respondents from that month’s smaller sample agreed that “a protectionist stance is important to help address the major economic problems in this country created by the pandemic” and an equal percentage believed that such policies are “important to help the domestic economy recover.”

One reason for this support of techno-protectionism might be the widespread belief that it’s increasingly become the way of the world. Fully half of the September respondents told GE that “their government has taken a more protectionist stance during the COVID-19 pandemic” with only 13 percent reporting movement in the opposite direction and 34 percent perceiving no change.

At the same time, the GE poll revealed a deep ambivalence in business ranks about the virtues of tech self-sufficiency. Notably, 86 percent of the September respondents agreed that “More partnerships across countries will help drive progress on innovation.” And half worried that “Restrictions on movement of people/goods/services” were “a major cause for concern regarding innovation progress.”

One possible reason for the continued belief in the value of international collaboration: seemingly strong confidence that techno-nationalism (at least in their home market) will be a flash in the pan. Only 22 percent believed that such protectionism would last more than three years.

These results hardly exhaust the list of unexpected findings from the GE report. In fact, you’ll be seeing some more of them on RealityChek this week. But the discrepancy between them and the almost unamimous endorsement for the free movement of technological knowledge across borders from the corporate community deserves much more attention, and represents evidence that many of the globalist public positions taken by these executives’ companies and businesses stem from concern not for for the national interest, but for their own already healthy bottom lines.