The biggest reason to be appalled by The Wall Street Journal‘s excellent report yesterday on America’s efforts to control exports of high tech goods and knowhow to China wasn’t the raw data it contained – which showed that the U.S. government almost never rejects requests by business to sell high tech goods and knowhow to China.
No – as disturbing and scary as these findings are, the biggest reason to be appalled by the article is how clearly it reveals that, after decades of dealing with China, and despite the recent U.S. decision to spend huge amounts of money to try to stay ahead of China technologically, Washington has learned absolutely nothing about the threat to America’s national security, independence, and prosperity posed by this increasingly hostile and dangerous adversary, or how to counter it effectively. And maybe it hasn’t wanted to learn?
In fact, the article, by Journal reporter Kate O’Keefe, adds to the evidence that U.S. officials don’t even view China as especially hostile – let alone dangerous – at all. The People’s Republic is evidently assumed to be a country and an economy that in key respects closely resembles most other major powers with which U.S. companies do business.
Sure, U.S. export controls policies put China in a special category, and subject it to special restrictions for goods like weapons and satellite and space equipment, whose transfer to China is banned outright. But when it comes to “dual use” products and tech – which have both civilian and military applications, and which comprise an enormous group of goods and services – the American approach in practice treats China
>as if it’s got an independent private sector that can be sharply distinguished from its government agencies;
>as if China’s civilian government agencies can be easily distinguished from its national security apparatus;
>as if virtually all these entities operate in reasonably transparent ways and can be “trusted” to act safely in their role as “end-users” of these purchases;
>as if America’s main export control or sanctions challenge is making sure that cutting edge products and tech aren’t provided either directly to the Chinese military or other branches of the Chinese bureaucracy that jeopardize U.S. interests (like the secret police), or indirectly – via a small handful of other actors that, for whatever reason (Corruption? Tragically misguided patriotism?), will pass them along to the Bad Guys; and
>as if the U.S. government has the ability to make sure that prohibited items are kept out of the wrong hands.
Just two examples from O’Keefe’s article of how patently inane this approach has been:
>”Kharon, a Washington, D.C.-based research and data-analytics firm, said it has identified tens of thousands of Chinese entities that may meet the U.S. criteria for military end-user export restrictions, even though there are only roughly 70 on the Commerce Department’s current list.” (Commerce is the lead export control agency.)
>The Commerce Department has added to its list of entities for which Americans need a license to do business the officially state-owned flagship Chinese semiconductor manufacturer SMIC – but only after a U.S. defense contractor “documented the chip maker’s military customers.”
Back in 2012, I wrote that China represents a systemic challenge requiring a completely different export control (and sanctions) approach. Nowadays, when China has grown so much stronger in large part because of this La-La-Land (to be charitable) U.S. strategy, a course change is more important than ever.
What this means is that, no matter how they’re classified by the Chinese regime or structured on paper, every single entity in the People’s Republic that’s in the tech or broader manufacturing sector must be recognized as being under Beijing’s actual or potential control. Therefore, they can be counted on to (a) make available to the authorities anything they acquire that can undermine U.S. interests and/or keep the leadership in power; and (b) do everything possible, including with the regime’s active help, to cover its tracks.
This doesn’t mean that difficult China export control and sanctions policy issues don’t lie ahead for Washington. For that, we can thank all the U.S. leaders before Donald Trump’s presidency who so recklessly turned the People’s Republic into such a powerhouse tech manufacturer and major tech market. (At the same time, the fundamentally moronic export control system remained largely intact during the Trump years.) But one critical reform can be put in place immediately – new regulations realizing that if a product or technology is deemed too dangerous to sell or transfer to any one China entity, it’s by definition too dangerous to sell or transfer to all Chinese entities. Because the China challenge is systemic.