Im-Politic: VP Debate Questions That Should be Asked

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1619 Project, African Americans, Barack Obama, Biden, budget deficits, CCP Virus, censorship, China, Confederate monuments, Constitution, coronavirus, COVID 19, education, election 2020, Electoral College, filibuster, Founding Fathers, free speech, healthcare, history, history wars, Im-Politic, inequality, investment, Kamala Harris, Mike Pence, national security, Obamacare, police killings, propaganda, protests, racism, riots, semiconductors, slavery, spending, Supreme Court, systemic racism, Taiwan, tariffs, tax cuts, taxes, Trade, trade war, Trump, Vice Presidential debate, Wuhan virus

Since I don’t want to set a record for longest RealityChek post ever, I’ll do my best to limit this list of questions I’d like to see asked at tonight’s Vice Presidential debate to some subjects that I believe deserve the very highest priority, and/or that have been thoroughly neglected so far during this campaign.

>For Vice President Mike Pence: If for whatever reason, President Trump couldn’t keep the CCP Virus under control within his own White House, why should Americans have any faith that any of his policies will bring it under control in the nation as a whole?

>For Democratic candidate Senator Kamala Harris: What exactly should be the near-term goal of U.S. virus policy? Eliminate it almost completely (as was done with polio)? Stop its spread? Slow its spread? Reduce deaths? Reduce hospitalizations? And for goals short of complete elimination, define “slow” and “reduce” in terms of numerical targets.

>For Pence: Given that the administration’s tax cuts and spending levels were greatly ballooning the federal budget deficit even before the virus struck, isn’t it ridiculous for Congressional Republicans to insist that total spending in the stimulus package remain below certain levels?

For Harris: Last month, the bipartisan Congressional Problem Solvers Caucus unveiled a compromise stimulus framework. President Trump has spoken favorably about it, while stopping short of a full endorsement. Does Vice President Biden endorse it? If so, has he asked House Speaker Nancy Pelosi to sign on? If he doesn’t endorse it, why not?

For Pence: The nation is in the middle of a major pandemic. Whatever faults the administration sees in Obamacare, is this really the time to be asking the Supreme Court to rule it un-Constitutional, and throw the entire national health care system into mass confusion?

For Harris: Would a Biden administration offer free taxpayer-financed healthcare to illegal aliens? Wouldn’t this move strongly encourage unmanageable numbers of migrants to swamp U.S. borders?

For Pence: President Trump has imposed tariffs on hundreds of billions of dollars’ worth of Chinese exports headed to U.S. markets. But U.S. investors – including government workers’ pension funds – still keep sending equally large sums into Chinese government coffers. When is the Trump administration finally going to plug this enormous hole?

For Harris: Will a Biden administration lift or reduce any of the Trump China or metals tariffs. Will it do so unconditionally? If not, what will it be seeking in return?

For both: Taiwan now manufactures the world’s most advanced semiconductors, and seems sure to maintain the lead for the foreseeable future. Does the United States now need to promise to protect Taiwan militarily in order to keep this vital defense and economic knowhow out of China’s hands?

For Pence: Since the administration has complained so loudly about activist judges over-ruling elected legislators and making laws themselves, will Mr. Trump support checking this power by proposing term limits or mandatory retirement ages for Supreme Court Justices? If not, why not?

For Harris: Don’t voters deserve to know the Biden Supreme Court-packing position before Election Day? Ditto for his position on abolishing the filibuster in the Senate.

>For Pence: The Electoral College seems to violate the maxim that each votes should count equally. Does the Trump administration favor reform? If not, why not?

>For Harris: Many Democrats argue that the Electoral College gives lightly populated, conservative and Republican-leaning states outsized political power. But why, then, was Barack Obama able to win the White House not once but twice?

>For Pence: Charges that America’s police are killing unarmed African Americans at the drop of a hat are clearly wild exaggerations. But don’t you agree that police stop African-American pedestrians and drivers much more often than whites without probable cause – a problem that has victimized even South Carolina Republican Senator Tim Scott?

For Harris: Will Biden insist that mayors and governors in cities and states like Oregon and Washington, which have been victimized by chronic antifa violence, investigate, arrest and prosecute its members and leaders immediately? And if they don’t, will he either withhold federal law enforcement aid, or launch such investigations at the federal level?

For Pence: Why should any public places in America honor Confederate figures – who were traitors to the United States? Can’t we easily avoid the “erasing history” danger by putting these monuments in museums with appropriate background material?

For Harris: Would a Biden administration support even peacefully removing from public places statues and monuments to historic figures like George Washington and Thomas Jefferson because their backgrounds included slave-holding?

For both: Shouldn’t voters know much more about the Durham Justice Department investigation of official surveillance of the Trump campaign in 2015 and 2016 before Election Day?

For both: Should the Big Tech companies be broken up on antitrust grounds?

For both: Should internet and social media platforms be permitted to censor any form of Constitutionally permitted speech?

For Pence: Doesn’t the current system of using property taxes to fund most primary and secondary public education guarantee that low-income school children will lack adequate resources?

For Harris: Aren’t such low-income students often held back educationally by non-economic factors like generations of broken families and counter-productive student behavior, as well as by inadequate school funding – as leading figures like Jesse Jackson (at least for one period) and former President Obama have claimed?

For Pence: What’s the difference between the kind of “patriotic education” the President says he supports and official propaganda?

For Harris: Would a Biden administration oppose local school districts using propagandistic material like The New York Times‘ U.S. history-focused 1619 Project for their curricula? Should federal aid to districts that keep using such materials be cut off or reduced?

Now it’s your turn, RealityChek readers! What questions would you add? And which of mine would you deep six?

Making News: Podcast Now On-Line of National Radio Interview on TikTok, China Strategy, Biden, & the Stimulus Negotiations

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China, Congress, decoupling, election 2020, Joe Biden, Making News, Mark Meadows, Market Wrap with Moe Ansari, national security, privacy, stimulus package, tech, TikTok, Trump

I’m pleased to announce that a podcast is now on-line of an interview I did yesterday on Moe Ansari’s nationally syndicated radio show.

Click here and then scroll down a bit to the segment with my name on it to listen to a timely, informative session on three major headline issues: what President Trump is trying to accomplish with his decision to ban from U.S. markets the popular Chinese social media app TikTok; how a President Joe Biden is likely to handle China issues; and what to expect from the current White House-Congress talks on the economic stimulus package. The segment comes on at about the 23:50 mark.

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

 

Our So-Called Foreign Policy: Why Microsoft Can’t Be Trusted to Run TikTok

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censorship, China, Microsoft, national security, Our So-Called Foreign Policy, privacy, social media, tech, TikTok

When I read that President Trump’s recent decision to ban TikTok from the U.S. market gave the popular Chinese social media app’s services one chance to survive intact – a purchase of its U.S. business by an American-owned company (most likely, it seems, Microsoft) – my “Uh oh” antennae started buzzing. I knew that there’s no reason for confidence that a U.S.-owned tech multinational would adequately safeguard American national security and individual privacy interests versus the kinds of threats that have already been posed by TikTok’s obligations to an increasingly hostile Chinese government, much less uphold values in the freedom of expression family.

I knew this because research for a 2013 article I published on Bloomberg.com revealed that Microsoft was one of the many big U.S. tech companies whose drive for access to China’s potentially huge customer base involved extensive activities aimed at strengthening the technological prowess that has helped make the People’s Republic such a danger to America as well as the world at large.

As I wrote – based on the companies’ own financial reports – these efforts have included the establishment of state-of-the-art factories and laboratories, along with training programs that have taught literally hundreds of thousands of Chinese students state-of-the-art tech skills not only at facilities run by these businesses, but through partnerships with Chinese universities.

Worse, as made clear by a Financial Times report last week Microsoft, whose operations in China “have included collaborations with researchers at China’s military-controlled National University of Defense Technology,” has done nothing important since this piece came out to scale back such cooperation with China’s dictatorial regime.

For example, in 2015, Chinese leader Xi Jinping “visited Microsoft’s headquarters in Redmond, Washington, where he praised the company for “driving forward the development of China’s ICT [information and communications technology] industry”. Moreover, last month, “Microsoft was the sole US company invited to a televised entrepreneurs’ summit with Mr Xi.”

Perhaps most troubling, the Financial Times reported that “The company’s management of its research staff is very light.” According to a former executive at Microsoft China, limiting research collaborations is “a really tough question — research is a very liberal environment in itself. People might question [research collaborations] but from the point of view of our researchers, they want to work with the best partners they can find in their field.”

And what did Microsoft get for itself and its shareholders for all this assistance? Almost nothing. Even though its Windows operating system enjoys an estimated 90 percent market share, piracy of its products is so widespread that China accounts for less than two percent of its global revenues, according to its president. So I’m glad I don’t have to make the case that Microsoft can be relied on vigilantly to resist Beijing’s pressures to remain privy to important U.S. data – by hook or by crook.

Indeed, another recent Financial Times article claimed that Microsoft is mulling a takeover agreement that would give it “one year to separate TikTok from its Chinese parent and address US government concerns over the security of the data generated by the app.” Yet even if Microsoft’s U.S.-based executives do their darnest to shut the Chinese government out, that could leave plenty of time for TikTok’s Chinese employees to work with the regime to create new or keep open existing backdoors to Beijing.  Alternatively, once the deal is done, Microsoft might simply manage ongoing cybersecurity issues as “lightly” as the U.S. parent has managed its research team-ups with China’s regime.

Moreover, requiring Microsoft to conclude the separation much sooner would still leave the company – which would still be anxious for more China business – free to  wind up emulating TikTok’s practice of taking down content deemed offensive by China. Such subjects include praise for the Tiananmen Square protests of 1990, or the Tibetan independence movement. And Microsoft certainly wouldn’t be the first U.S. tech company to regulate speech with political aims in mind.

For all I know, effective safeguards against all these contingencies might be developed. But at very best, preventing China from continuing to exploit TikTok – and other tech products and services it’s currently offering to U.S. customers or could offer – will be a never-ending struggle. Best to remove as many uncertainties as possible, and make defense as easy as possible, by simply kicking TikTok and other Chinese products like it out, and keeping them out.   

Making News: On CNBC Today on the U.S.-China Tech War

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China, CNBC, Making News, national security, privacy, social media, technology, TikTok, Trump, WeChat

I’m pleased to announce that I’m scheduled to appear on CNBC this afternoon EST to talk about the intensifying technology conflict between the United States and China.  The segment, slated to start at 2 PM EST, will key off President Trump’s announcement last night that the Chinese social media apps TikTok and WeChat will be banned from the American market.

You can watch the segment live on the network, and if you can’t catch it, I’ll post a link to the video recording as soon as it’s available.

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

Our So-Called Foreign Policy: The U.S. and its Universities Remain Asleep at the Switch on the China Tech Threat

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Argonne National Laboratory, China, higher education, Hoover Institution, John Pomfret, Lawrence Berkeley National Laboratory, National Institutes of Health, National Science Foundation, national security, Our So-Called Foreign Policy, science, technology, technology transfer, universities

The word “blockbuster” has been so overused and misused by the national media during the Trump era that it’s impact has been watered down. Yet a new report by the California-based Hoover Institution definitely deserves that description – for it details the shocking and dangerous extent to which the U.S. government’s science and technology research arms, along with many of America’s top universities, have in recent years been merrily working, and no doubt sharing crucial defense-related technology, with individuals tightly connected with China’s military.

You can read an excellent summary of the report here by John Pomfret, a former longtime Washington Post China correspondent who’s turned into a full-time scholar of U.S. relations with the People’s Republic. But there are six points that I think deserve special attention.

First,even anyone who didn’t know that the Chinese institutions from which the Chinese researchers have come are called by China’s regime itself “Seven Sons of National Defense,” two of the names alone should be kind of a giveaway: Beiing University of Aeronautics and Astronautics, and Nanjing University of Aeronautics and Astronautics. Unless anyone at any of the American universities involved doesn’t know that any activity in China with an aerospace component isn’t largely military in nature?

Second, the research projects themselves being conducted by teams of scientists from these U.S. and Chinese institutions haven’t been given names with obvious military implications. But any American authorities with a tech background should be aware of this dimension. Take “Effect of gallium addition on the microstructure and micromechanical properties of constituents in Nb-Si based alloys.” Gallium is a metal used mainly in micro-electronics manufacturing. Among its properties: It can “produce laser light directly from electricity….” Nothing military to see there! Ditto for the role played by gallium arsenide its role in making semiconductors for pressure sensors for touch switches.

“Nb” is niobium, another metal, is useful for making “superalloys for heat resistant equipment” – and therefore is handy for producing items like jet engines. And of course “Si”, or silicon, is a core building block of semiconductors themselves.

Nor is that work the only research that should have raised eyebrows. In 2018, an entity called the China-US International Cooperation Project (about which a Google search turned up squadoosh) and the Harbin Institute of Technology jointly funded a Master’s thesis on the “Modeling and Analysis of Energy Characteristics and Equivalent Carbon Emissions of CNC Centerless Grinding Machine.”

These types of machine tools are critical for defense manufacturing – including in aerospace – because they can make sure that metal surfaces of parts and components of complex manufactured devices have smooth enough surfaces to operate friction-free – an especially important goal to achieve when producing weapons that need to be highly reliable even in the most challenging situations. Indeed, when these grinders get advanced enough, their overseas sale is regulated for national security reasons by the U.S. government. Why on earth would that same government be helping the Chinese find out anything new about them?

Possibly most obvious – and therefore possibly most maddening – of all: Why did a researcher at the University of Virginia co-author with three colleagues affiliated with Nanjing University of Aeronautics and Astronautics a 2018 article titled “Research Progress of Adaptive Control for Hyper-Sonic Vehicle in Near Space”? Did he and the University of Virginia think we’ve arrived already at the United Federation of Planets phase of human history?

Third, as indicated above, the list of American universities involved in these potentially dangerous activities is as long as the inividual schools are highly regarded. It includes Virginia, MIT, Stanford, Columbia, the University of Pennsylvania, the University of Michigan, the University of Texas, the University of North Carolina, Purdue University, Arizona State University, the University of Minnesota, George Washington University, the University of California-Irvine, and Georgia Tech.

Fourth, the list of U.S. government agencies involved is impressive, too. It includes the National Institutes of Health, the Lawrence Berkeley National Laboratory, Argonne National Laboratory, Oak Ridge National Laboratory, and the National Science Foundation.

Fifth, U.S. universities aren’t close to getting a handle on making sure that the research they sponsor in various ways doesn’t strengthen the Chinese military – and therefore undermine U.S. national security. As the Hoover authors point out:

“Only now is the US research community awakening to the intensity and scope of [the China challenge] and its military or dual-use dimensions. However, in the absence of external regulatory or policy mandates, US research institutions have been slow to adapt their due diligence and risk management frameworks. Weak institutional reporting mechanisms and compliance cultures have permitted some collaborations to go unknown, unreported, or underreported. Even among vetted collaborations, conflicts of commitment, unreported or misreported elements, or other activities that undermine the integrity of US scientific research and exceed the scope of collaboration agreements occur. In short, prevailing due diligence and risk management practices for screening and tracking potential collaborations with PRC entities fall far short of what circumstances require.”

Sixth, as must be obvious, the U.S. government isn’t doing much better. Specifically, according to the Hoover study, official U.S. responses (as with those of universities) focus too tightly on whether current laws and regulations aimed dealing with these threats are being violated, without considering whether these restrictions are still adequate. Moreover, Washington seems to view its processes of granting visas as the predominant way to fend off the Chinese threat. As noted by the Hoover authors, however, “collaborations with US partners may move online or to sites outside of the United States.”

So although the Trump administration is far more keenly aware of this problem than its predecessors, clearly is still has a very long way to go.

The Hoover authors are very careful to say that they’re not urging a complete ban on U.S. scientific and technological cooperation with China, and fully acknowledge that the nation has enjoyed major benefits from its academic and research-related openness. Indeed, they lay out a strategy for the research community to avoid handing China many of the keys to America’s scientific and technological kingdoms – in hopes that a heavier government hand can be avoided. Unfortunately, they make such a strong case that both the public and private research communities have been so far behind the eight ball in this respect, that it’s hard to see how anything short of sweeping official measures can deal adequately with the kind of systemic threat posed by China.

(What’s Left of) Our Economy: Without Supply Chain Transparency, There’s No Supply Chain Security

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Bureau of Economic Analusis, Defense Department, Defense Innovation Unit, defense manufacturing, election 2020, FDI, foreign direct investment, GAO, Government Accountability Office, health security, Joe Biden, medical equipment, national security, offshoring, Pentagon, supply chains, Trump, {What's Left of) Our Economy

Earlier this month, I criticized Joe Biden’s new plan to strengthen U.S. domestic manufacturing with a special eye toward boosting the security of key supply chains for holding out as a model the Pentagon’s work on defense-related manufacturing. Just this week, I found even more evidence to support the view that if the presumptive Democratic presidential nominee is really serious about achieving this goal (and given his longstanding record on trade and globalization issues, ample doubt is warranted) he’ll need a dramatically new model.

By the way, these findings show that the Trump administration also remains too far from getting its own supply chain act together.  And the main reason is a dangerous – and wholly unnecessary – lack of supply chain transparency.

The evidence comes from a September, 2019 report from the U.S. Government Accountability Office (an investigative arm of Congress) that summarizes the views of a panel of specialists convened to discuss foreign threats to the U.S. defense manufacturing base, and presents findings on the subject from various U.S. government agency, private sector, and university studies. The threats include the offshoring of the production of key defense-related goods; takeovers by foreign entities of U.S.-based facilities that supply these products, along with important services, or foreign acquisitions of significant stakes in these facilities; and the loss of U.S. competitiveness in these areas for market- and competition-related reasons and the resulting turns to foreign suppliers.

And crucially, the panelists consulted (listed on p. 40 of the report) include no notable supposed globalization alarmists or China hawks. In fact, one panelist was a senior executive of the U.S.-China Business Council, which has been a major pillar of what I call the nation’s Offshoring Lobby.

The report correctly noted that the use of foreign-origin goods and services can benefit U.S. national security interests. Specifically, it can “lower costs and provide better access to foreign workers and markets [which can help the companies in question gain the benefits of economies of scale by winning more customers].” Moreover, “When companies that offshore contract with DOD [the Departent of Defense], they can pass those benefits along. Foreign investment can help U.S. companies grow.”

So as in all areas of public policy, the key is finding the best balance, and reasonable people can always legitimately disagree on where it’s found. But here’s what’s really alarming about the message sent by the GAO report – and collectively by all the specialists and materials consulted: Neither the Defense Department nor any other branch of the U.S. government has the ability needed to achieve this goal partly because they lack the information needed to identify vulnerabilities, and partly because much helpful information is kept confidential at the request of private industry.

Here are the main relevant observations and conclusions presented in the report making emphatically clear that the nation lacks the supply chain transparency vital to improving supply chain security:

>”[T]he absence of a common definition of offshoring makes it difficult to analyze the extent to which offshoring is occurring in general as well as its effect on the defense supplier base. As such, the extent of offshoring and its effects are largely unknown.”

>”[P]ublicly available data do not provide granularity to analyze foreign direct investments in industry subsectors that comprise the defense supplier base.”

>”Pentagon “industrial policy officials told us that BEA’s [the Commerce Department’s Bureau of Economic Analysis] publicly available data are not complete enough to assess foreign investments in U.S. defense industrial subsectors. We also found that BEA does not disclose certain data for industry subsectors if the data would disclose the identity of individual companies, as these data are considered confidential. For example, BEA data on new foreign direct investment from China in the U.S. industry subsector “electrical equipment, appliances and component manufacturing” are not publicly available for 3 of the 5 years we reviewed.”

>”[A]ccording to BEA, new foreign direct investment data do not capture foreign investment transactions that involve less than 10 percent voting ownership in a U.S. enterprise. This may include data on venture capital investments in U.S. start-ups. According to a report by the Defense Innovation Unit (DIU) within DOD, there are an increasing number of investments in U.S. venture-backed startups from China-based investors that are not tracked by the U.S. government. This limits full visibility into foreign investors and the technologies they are investing in, as well as any increase or decrease in investment flows.”

>The DIU “echoed concerns about the limitations of U.S. government data and stated that the U.S. government does not comprehensively track all available data on investments, including those from private sources to assemble a complete picture of the level of foreign investment in U.S. companies.”

One big takeaway from the above is that the Defense Department is far from the only culprit here. Much more important, though, nothing could be clearer from this list of information gaps than that the Pentagon that Biden would rely on hasn’t made much of an effort to close them. And although the Trump administration has rhetorically prioritized reshoring manufacturing back to the United States in part for national security-related reasons, and can boast noteworthy progress in changing the U.S. trade policies that have encouraged so much defense-related offshoring, it’s clearly made little progress in making sure that it has the most fundamental information it needs to make sound decisions.

Also critical to recognize: It’s not that this information doesn’t exist. As I’ve previously noted, the companies that produce these goods and provide these services know exactly they, and most of their own contractors and subcontractors, are doing. Fully understanding and optimizing their own operations, after all, is one of the main ways they make money.

And the best way to extract what the government needs is to require legally what I’ve described as “Truth in Globalization” – and require it fast. Otherwise, no matter who wins the Presidency in November, the U.S. government will needlessly keep flying blind on supply chain security.

Our So-Called Foreign Policy: Evidence that the Multinationals Really Did Sell the U.S. Out to China

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capital spending, chemicals, China, computers, electronics, health security, healthcare goods, information technology, investment, Lenin, manufacturing, multinational companies, national security, offshoring, offshoring lobby, Our So-Called Foreign Policy, pharmaceuticals, research and development, supply chains, tech, tech transfer, U.S-China Economic and Security Review Commission, USCC, World Trade Organization, WTO

RealityChek readers and anyone who’s familiar with my work over many years know that I’ve often lambasted U.S. multinational companies for powerfully aiding and abetting China’s rise to the status of economic great power status – and of surging threat to U.S. national security and prosperity. In fact, the dangers posed by China’s activities and goals have become so obvious that even the American political and policy establishments that on the whole actively supported the policies – and that permitted money from this corporate Offshoring Lobby to drive their decisions – are paying attention.

If you still doubt how these big U.S. corporations have sold China much of the rope with which it’s determined to hang their own companies and all of America (paraphrasing Lenin’s vivid supposed description of and prediction about the perilously shortsighted greed of capitalists), you should check out the latest report of the U.S-China Economic and Security Review Commission (USCC). As made clear by this study from an organization set up by Congress to monitor the China threat, not only have the multinationals’ investments in China figured “prominently in China’s national development ambitions.” They also “may indirectly erode the United States’ domestic industrial competitiveness and technological leadership relative to China.”

Worst of all, “as U.S. MNE (“multinational enterprise) activity in China increasingly focuses on the production of high-end technologies, the risk that U.S. firms are unwittingly enabling China to achieve its industrial policy and military development objectives rises.”

And a special bonus – these companies’ offshoring has greatly increased America’s dependence on China for supplies of crucial healthcare goods.

Here’s just a sampling of the evidence presented (and taken directly by the Commission from U.S. government reports):

> U.S. multinationals “employ more people in China than in any other country outside of the United States, primarily in the assembly of computers and electronic products.” Moreover, this employment skyrocketed by 574.6 percent from 2000 to 2017.

> “China is the fourth-largest destination for U.S. MNE research and development (R&D) expenditure and increasingly competes with advanced economies in serving as a key research hub for U.S. MNEs. The growth of U.S. MNE R&D expenditure in China is also comparatively accelerated, averaging 13.6 percent yearon-year since 2003 compared with 7.1 percent for all U.S. MNE foreign affiliates in the same period. This expenditure is highest in manufacturing, particularly in the production of computers and electronic products.”

> “U.S. MNE capital expenditure in China has focused on the creation of production sites for technology products. This development is aided by the Chinese government’s extensive policy support to develop China.”

> The multinationals’ capital spending on semiconductor manufacturing assets “has jumped 166.7 percent from $1.2 billion in 2010 (the earliest year for which complete [U.S government] data is available) to $3.2 billion in 2017, accounting for 90 percent of all U.S. MNE expenditure on computers and electronic products manufacturing assets in China.”

> “China has grown from the 20th-highest source of U.S. MNE affiliate value added in 2000 ($5.5 billion) to the fifth highest in 2017 ($71.5 billion), driven primarily by the manufacture of computers and electronic products as well as chemicals. The surge is especially notable in semiconductors and other electronic components.”

> “[P]harmaceutical manufacturing serves as the largest chemical sector in terms of value-added [a measure of manufacturing output that seeks to eliminate double-counting of output by stripping out the contribution of intermediate goods used in final products]…” And chemicals – the manufacturing category that include pharmaceuticals – has become the second largest U.S-owned industry in China measured by the value of its assets (after computers and electronic products).

Incidentally, the report’s tendency to use 2000 as a baseline year for examining trends is no accident. That’s the year before China was admitted into the World Trade Organization (WTO) – and the numbers strongly reenforce the argument that the multinationals so avidly sought this objective in order to make sure that the value of their huge planned investments in China wouldn’t be kneecapped by any unilateral U.S. tariffs on imports from China (including those from their factories). For the WTO’s combination of consensus decision-making plus the protectionist natures of most of its members’ economies created a towering obstacle to Washington acting on its own to safeguard legitimate American domestic economic interests from Chinese and other foreign predatory trade and broader economic activity.

At the same time, despite the WTO’s key role in preserving the value of the multinationals’ export-focused China investments, the USCC study underestimates how notably such investment remains geared toward exporting, including to the United States. This issue matters greatly because chances are high that this kind of investment (in China or anywhere else abroad) has replaced the multinationals’ factories and workers in the United States. By contrast, multinational investment in China (or anywhere else abroad) that’s supplying the China market almost never harms the U.S. domestic economy and in fact can help it, certainly in early stages, by providing foreign customers that add to the domestic customers of U.S.-based manufacturers.

There’s no doubt that the phenomenal growth of China’s own consumer class in recent decades has, as the China Commission report observes, generated more and more American business decisions to supply those customers from China. In other words, the days when critical masses of Chinese couldn’t possibly afford to buy the goods they made in U.S.- and other foreign-owned factories are long gone.

But the data presented by the USCC does nothing to support this claim, and the key to understanding why is the central role played by computer, electronics, and other information technology-related manufacturing in the U.S. corporate presence in China. For when the Commission (and others) report that large shares of the output of these factories are now sold to Chinese customers, they overlook the fact that many of these other customers are their fellow entities comprising links of China-centric corporate supply chains. These sales, however, don’t mean that the final customers for these products are located in China.

In other words, when a facility in China that, for example, performs final assembly activities on semiconductors sells those chips to another factory in China that sticks them into computers or cell phones or HDTV sets, the sale is regarded as one made to a Chinese customer. But that customer in turn surely sells much of its own production overseas. As the USCC documents, China’s consumer market for these goods has grown tremendously, too. But China’s continually surging share of total global production of these electronics products (also documented in the Commission report) indicates that lots of this output continues to be sold overseas.

Also overlooked by the USCC – two other disturbing apects of the multinationals’ activities in China.

First, it fails to mention that all the computer and electronics-related investment in China – which presumably includes a great deal of software-related investment – has contributed to China’s economic and military ambitions not only by transferring knowhow to Chinese partners, but by teaching huge numbers of Chinese science and technology workers how to generate their technology advances. The companies’ own (often glowing) descriptions of these training activities – which have often taken the form of dedicated training programs and academies – were revealed in this 2013 article of mine.

Second, the Commission’s report doesn’t seem to include U.S. multinationals’ growing investments not simply in high tech facilities in China that they partly or wholly own, but in Chinese-owned entities. As I’ve reported here on RealityChek, these capital flows are helping China develop and produce high tech goods with numerous critical defense-related applications, and the scale has grown so large that some elements of the U.S. national security community had been taking notice as early as 2015. And President Trump seems to be just as oblivious to these investments as globalist former President Barack Obama was.

These criticisms aside, though, the USCC has performed a major public service with this survey of the multinationals’ China activities. It should be must reading in particular for anyone who still believes that these companies – whose China operations have so greatly enriched and therefore strengthened the People’s Republic at America’s expense – deserve much influence over the U.S. China policy debate going forward.

Im-Politic: The Mainstream Media Keeps Abetting Think Tank Fraud

Tags

AICGS, American Institute for Contemporary German Studies, Carnegie Endowment for International Peace, idea laundering, Im-Politic, lobbying, Mainstream Media, national security, NATO, Swamp, The Johns Hopkins University, think tanks, Trade, Trump

The following item didn’t even merit a full article in the eyes of Politico editors. But it speaks volumes on how the nation’s journalists continue to do a terrible job of reporting on the vested interests behind much of the opinion and analysis on which they rely to flesh out their coverage of any number of issues.

Here it is in full, beneath the headline “Hopkins Pushes U-Turn on German Trade Policy:

“A new report from Johns Hopkins University advises the winner of the U.S. presidential election to reverse many of the trade and defense policies the Trump administration has pursued with Germany.

“The paper from the the school’s American Institute for Contemporary German Studies [AICGS] recommends redoubling the U.S. commitment to NATO, which Trump has de-emphasized over his term, and pursuing a “safe trade” strategy that would aim for a new U.S.-EU trade agreement to lower tariffs across the Atlantic. It also argues the countries should commit to reform the WTO to counter China’s rise.”

To begin on a personal note, I first encountered the Institute in the mid-1980s, when I was an editor at FOREIGN POLICY magazine. It was newly created, and my reaction to its appearance was probably much the same as your reaction to its mention in this press item: It’s a think tank, it’s connected with a major university, so its work must top some kind of quality threshhold.

Revealingly, this period came before private sector and other special interest donors became so dominant in the think tank world and, more important, began actively and indeed strategically using these institutes to further highly self-interested, specific agendas. (See this history for an excellent account of how and why it changed.)

In other words, many and probably most of them weren’t chiefly engaged in what I’ve called “idea laundering” – seeking to advance these agendas by using think tanks to garb them in the raiment of traditional, truth-seeking scholarlship. So I didn’t ask myself who was funding the Institute. (Full disclosure: The think tank that then published FOREIGN POLICY magazine, the Carnegie Endowment for International Peace, was at that time financed by big bucks provided for its creation by Gilded Age industrial magnate Andrew Carnegie. To my knowledge, that endowment to that point was so big, and managed and invested so smartly, that no outside fund-raising was necessary.)

But precisely because times have changed so dramatically, I not only wondered who pays for the Institute – I investigated the subject. And what I found is that not only is the AICGS financed significantly by large banks and corporations who have had a strong vested stake in restoring what was for them a very lucrative pre-Trump U.S.-Germany economic status quo (one of whose main beneficiaries was China). It’s also financed significantly by the German government – which has at least as strong a vested stake in restoring a pre-Trump status quo that was not only economically profitable, but strategically advantageous. For under President Trump’s predecessors, the United States was willing to subsidize heavily  Germany’s defense because numerous German governments (including today’s) have preferred to free ride militarily and spend public monies elsewhere – or let German taxpayers keep them.

Specifically, the Institute’s donors include the “Transatlantic Program of the Federal Republic of Germany with funds from the European Recovery Program (ERP) of the Federal Ministry of Economics and Energy” the Landesbank Baden- Wurttemberg (a regional-level German central bank), and the German Academic Exchange Service – which sounds non-governmental, but whose budget, its own website tells us:

“is derived mainly from the federal funding for various ministries, primarily the German Federal Foreign Office, but also from the European Union and a number of enterprises, organisations and foreign governments.”

Nor are these government funds trivial. According to the latest information AICGS has provided to the U.S. Internal Revenue Service (as required), in 2016, the organization raised just under $2.61 million in total revenue. Roughly half of this amount came from “contributions and grants” (a category that, oddly, doesn’t include “fund-raising events” income). And of the $1.34 million taken in through contributions and grants, the German economic affairs and energy ministry donated $206,434, and the German Academic Exchange Service gave $113,590. (No Landesbank contributions were recorded, presumably because they fell below the $1,000 level mandated by the Internal Revenue Service for reporting – although there’s no way to know how much this official German financial agency, or the other German government agencies, contributed to one of AICGS’ fund-raising events.),

And there can be no doubt that both the businesses and the German government consider it much more effective and convincing to have a scholarly sounding American Institute for Contemporary German Studies carrying their water than spreading their messages themselves. In fact, Politico fell for this ruse hook, line, and sinker, and indeed reinforced the deception – with a headline describing the study’s results as coming not even from a think tank, but from a leading U.S. university. 

As I’ve argued often before (e.g., the Congressional testimony linked above), there’s nothing inherently wrong with any special interest using a think tank to push its priorities. Nor is there anything wrong with a foreign government engaging in the same practice.

But there’s a great deal wrong with these donors using think tanks on the sly. And when it comes to foreign governments, a legal issue comes up: whether these think tanks should be required to register a foreign lobbyists, as required by law.

As suggested above, AICGS is hardly the only idea launderer in Washington, D.C. and elsewhere in the country, and if you look hard enough – as I did – you can find the information on-line. But why should anyone have to make any significant effort? Why shouldn’t sponsorship information be displayed prominently on all the publicly released products of AICGS and think tanks generally? And since it’s not, why do Politico and other media outlets not report this information routinely?

Oncc the Trump era began, the Mainstream Media began ostentatiously adopting official slogans like “Democracy Dies in Darkness.”  I’m not aware of any references to “Draining the Swamp.”  And these news organizations’ continuing failure to expose idea laundering and similar strategies can’t help but keep feeding suspicions that they’re part of this morass.   

Making News: Podcast Now On-Line of Last Night’s China Trade War National Radio Interview

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China, Gordon G. Chang, Making News, national security, Phase One, The John Batchelor Show, Trade, trade war

I’m pleased to announce that the podcast is now on-line of last night’s interview on John Batchelor’s nationally syndicated radio show on the state of America’s economic conflict with China.  Click on this link to hear a timely discussion with me, John, and co-host Gordon G. Chang on which power has the upper hand in a clash that will greatly influence America’s national security as well as future prosperity.

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

Making News: Back on National Radio Tonight Talking China Trade

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China, Gordon G. Chang, Making News, national security, Phase One, The John Batchelor Show, Trade, trade war

I’m pleased to announce that I’m slated to return tonight to John Batchelor’s nationally syndicated radio show tonight to talk about where the U.S.-China economic conflict stands.  Although it hasn’t gotten as much news coverage as the CCP Virus or the recession or race relations, America’s dealings with its strongest economic rival will go far toward making or breaking its future prosperity and national security.  And you can listen to a timely discussion of these issues with me, John, and co-host Gordon G. Chang, focusing on the Phase One trade deal, by clicking here.

As usual, lately, because of pandemic conditions in New York City, the show’s home base, the interview was recorded this afternoon, and I don’t know exactly when my segment will air.  But the entire program runs from 9 PM-12 PM EST, and tuning into all of it will be well worth your while!

If you can’t listen tonight, I’ll post a podcast as soon as one’s available.  And keep checking in with RealityChek for news of upcoming media appearances and other developments.