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.

Our So-Called Foreign Policy: U.S. Companies Keep Feeding the China Tech Beast

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AI, artificial intelligence, Bloomberg.com, China, hacking, Karen Weise, Microsoft, national security, Our So-Called Foreign Policy, Paul Mozur, technology, technology transfer, The New York Times, Trump

Wow! This was quite the revealing – and disturbing – nugget buried in a recent New York Times article about American tech companies’ trials and tribulations in China! According to reporters Paul Mozur and Karen Weise, Microsoft’s “long-established research and development center has turned out valuable products and launched the careers of a generation of artificial-intelligence experts who have started important new companies in China.”

Mozur and Weise mentioned this Microsoft activity in order to make the important point that even companies, like the Seattle software giant, that have bent over backwards to remain viable in China by keeping Beijing happy in various ways seem to be fighting a losing battle. For even these firms are falling victim to China’s persistent desire to replace them in the country’s huge market with Chinese rivals.

But the reference to Microsoft’s artificial intelligence operations could well matter more to the United States because it underscores a point I made several years ago in a Bloomberg.com op-ed that bears on American national security: For decades, U.S. tech companies have been transferring to Chinese entities cutting edge knowhow that has greatly strengthened Beijing’s ability to endanger key American interests. It’s the price they need to pay to keep playing in the Chinese market. But whatever the commercial justification, and whether these transfers are voluntary, coerced, or somewhere in between (including the training of China’s tech workforce), they’ve too long been neglected by American policymakers.

My Bloomberg piece focused on technologies related to cyberhacking – where transfers ironically were coming back to bite the U.S. tech firms themselves. Since then, in several posts for RealityChek, I’ve covered tech transfer that’s handing China more conventional advanced defense-related knowhow. (See, e.g., here and here.)

But artificial intelligence-related operations push the threat to an entirely new level. For these capabilities will likely be the biggest game-changers in national security for decades, and Washington is already so alarmed by the progress China has made that many specialists worry that Beijing could soon forge ahead. Nearly as troubling: The more such tech American companies keep handing over to the Chinese, the closer China gets to self-sufficiency – the point at which it won’t need American assistance anymore.

The Trump administration rightly keeps calling attention to China’s growing technological prowess and the resulting dangers to the United States, and even many long-time supporters of the reckless pre-Trump China engagement policies are starting to agree.

But tariffs to punish predatory Chinese policies aimed at building tech dominance, and curbs on Chinese tech investments in the U.S. economy are necessary, not sufficient responses. The above linked Financial Times article indicates the administration now recognizes need to staunch the flow of advanced knowhow to China by American companies. But every minute new curbs are delayed, the United States will keep feeding the beast.

Our So-Called Foreign Policy: A Narrow-Minded Wake-Up Call on China’s Tech Drive

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artificial intelligence, Barack Obama, budget, China, mercantilism, National Science Foundation, Our So-Called Foreign Policy, research and development, technology, technology transfer, Trade, trade surpluses, Trump

“#SMH” (Shaking My Head) is one of my favorite Twitter hashtags, and it’s the perfect reaction to a new post on FOREIGNPOLICY.com on the growing technological challenge being posed to the United States by China, and on its frightening national security implications. The post has me shaking my head, and should have you shaking yours, because for all the useful information it contains on this critical subject, it completely misses the much bigger, much more important picture. And it misses it because the authors are so transparently determined to lionize former President Obama’s record in this regard, and vilify President Trump’s – though few of the facts warrant this conclusion.

The post is useful mainly for calling attention to China’s intensifying effort to establish global superiority in artificial intelligence, and to the Trump administration’s budget policies, which look oblivious to China’s efforts because they don’t provide adequate resources for federal research efforts capable of keeping the United States ahead.

I say “look” because the budget situation may not be as dire as strongly suggested by the authors. Specifically, it’s true that the administration has proposed cutting funding for the National Science Foundation’s artificial intelligence programs by 10 percent. At the same time, as made clear by the source they relied on, “the proposed budget does call for more spending on defense research and some supercomputing.”

Much more misleading is the post’s portrayal of the Obama administration as nothing less than Churchillian in sounding the tocsin. After all, the Obama reports the authors cite as evidence of his foresight on the subject came out at the very end of his presidency. At least as important, they gloss over major non-budgetary developments crucial to understanding China’s progress.

As they themselves admit, for instance, Chinese tech companies have established presences in Silicon Valley because they believe that “by rotating Chinese staff to Silicon Valley and American staff to Chinese campuses, they can accelerate the timeline for reaching parity with the United States in AI technology and depth of talent.” Under whose administration do the authors believe this practice started? And why do they think the Chinese were confident they were so free to proceed?

Also completely ignored: Throughout his presidency, Mr. Obama did absolutely nothing as American companies continued their longstanding efforts to transfer advanced technologies to Chinese partners voluntarily, or were forced to share this knowhow due to Chinese threats to shut them out of its market. Nor did he move to prevent these firms from investing in Chinese companies working on tech products and services with clear defense implications, or to help them cope with Beijing’s demands that they pony up or else.

And let’s not forget: The Obama administration made only the most token efforts to combat the predatory Chinese practices that enabled Beijing to amass immense trade surpluses with the United States; therefore to further fuel the growth of its market and make it that much more difficult for American companies to resist tech extortion demands; and to finance its own multi-billion technology development efforts with these handsome trade profits. Indeed, Mr. Obama staunchly opposed Congressional efforts to punish China for its most important mercantile policy:  currency manipulation.  

So I share the authors’ view that federal research and development efforts have been crucial to establishing America’s intertwined global technology and military leadership, and their hope that President Trump will reject the conservative anti-government dogma that justifies virtually every type of budget cut outside traditional defense or law enforcement spending. But the idea that America’s approach to the Chinese tech challenged was remotely up to snuff before Mr. Trump’s election not only fails the test of historical accuracy. It has blinded them to all the other policy changes needed to ensure that the United States stays Number One.

Our So-Called Foreign Policy: Trump’s China Strategy Seems Troublingly Silo-ed

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CFIUS, China, Committee on Foreign Investment in the United States, Diplomatic and Security Dialogue, foreign direct investment, industrial policy, James Mathis, mercantilism, national security, Our So-Called Foreign Policy, Rex Tillerson, semiconductors, Steven Mnuchin, super-computing, technology transfer, Trump, Wilbur Ross

Secretary of State Rex Tillerson and Secretary of Defense James Mathis are meeting with Chinese counterparts today in Washington, D.C. to conduct a “Diplomatic and Security Dialogue” – a stripped down Trump administration version of some of the ginormous official bilateral sessions the two countries have held periodically in recent years.

It’s unclear whether these talks will turn out to be more than the elaborate gabfests their predecessors quickly became. But it’s much clearer that their potential to contribute significantly to America’s security will be limited unless the administration starts taking many more urgently needed steps to move the nation’s Asia grand strategy into the twenty first century. And the major missing piece of this effort continues to be a serious effort to deny China the advanced technologies it will need to continue becoming a more formidable military competitor.

Some promising decisions have been taken, or are being considered. For example, Commerce Secretary Wilbur Ross is thinking of launching a national security review of U.S. trade in semiconductors with an eye toward fending off what he describes as an increasingly dangerous Chinese challenge in this defense-critical sector. Mathis and Treasury Secretary Steven Mnuchin have both publicly called for updating the interagency U.S. government process for screening prospective Chinese and other foreign investments in all defense-related companies (the Committee on Foreign Investment in the United States, or CFIUS). And they along with Ross have strongly suggested that they’re thinking of redefining the relevant statute’s mandate to include economic dimensions of national security. Just as encouraging, prominent members of Congress are drafting legislation along these lines.

And most recently, the administration has announced a big new effort to ensure continued American leadership over China in super-computing (although the semiconductor industry isn’t happy with some other features of Mr. Trump’s stance on federally sponsored research and development).

Moreover, the Trump administration is responding to the Chinese challenge much more promptly than its predecessor, which prioritized this cluster of problems very late in its tenure. Its proposed responses to mercantile Chinese industrial policies in technology industries were especially weak beer.

But as with the Obama administration, Team Trump seems to be paying little attention to the continued outflow of cutting-edge defense-related American knowhow to China – including to entities that are unquestionably controlled by the Chinese government. It’s unmistakably paying much less attention to these investments than to spending billions more to upgrade American military forces in East Asia – which of course could wind up facing Chinese weapons based on U.S. tech advances.

Today’s U.S.-China talks in Washington are due to be followed up later this summer by a session devoted to economics. Maybe by then, President Trump and his advisers will be pursuing the comprehensive, integrated approach that meeting the China challenge adequately requires?

Our So-Called Foreign Policy: An Asia Grand Strategy that Still Looks Like America Last

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Asia, Barack Obama, China, Defense Department, export controls, John McCain, military spending, neoconservatives, Our So-Called Foreign Policy, pivot, technology transfer, The Wall Street Journal, Trump

It looks like the Trump administration is going All Neocon on its Asia grand strategy. Or is it All Obama? Interestingly, both approaches have shared the same main features, and depressingly, both are dangerously incoherent and disturbingly resemble the course that Mr. Trump apparently has chosen to follow. .

The essence of neoconservative strategy in Asia consists of bloviating about the risks to America’s national security from China in particular, pushing for a stronger American military response, and with equal vigor backing economic policies that inevitably boost China’s military strength. And the quintessential example is Republican Senator John McCain of Arizona.

McCain has voted for his entire career in favor of the U.S. trade policy decisions that have enabled China to amass literally trillions of dollars worth of trade surpluses with the United States, and therefore finance an enormous military buildup that he himself has warned directly threatens American interests in Asia. He’s periodically voiced concerns about the lax U.S. export controls that have enabled China to secure some of America’s best defense-related technology. But he’s never sponsored any steps capable of solving this problem.

What McCain has focused on has been boosting military spending and stationing more of these forces, in large part to counter burgeoning Chinese ambitions. And recent Trump administration moves make clear that the president and his top advisers have been listening. As The Wall Street Journal reported earlier this month:

“The Pentagon has endorsed a plan to invest nearly $8 billion to bulk up the U.S. presence in the Asia-Pacific region over the next five years by upgrading military infrastructure, conducting additional exercises and deploying more forces and ships….The proposal, dubbed the Asia-Pacific Stability Initiative, was first floated by Sen. John McCain (R., Ariz.) and has been embraced by other lawmakers and, in principle, by Defense Secretary Jim Mattis and the head of U.S. Pacific Command, Adm. Harry Harris. Proponents haven’t developed details of the $7.5 billion plan.”

The Journal account goes on to remind readers that the Obama administration had pursued its own military “pivot” to Asia, but that it was “disparaged by critics as thin on resources and military muscle.” And of course, the former president refused to respond effectively to China’s predatory trade practices, and only very late in his second term began rethinking flood of advanced defense-related knowhow to the PRC.

President Trump has of course spoken repeatedly of acting forcefully to overhaul America’s China trade policies. But his administration’s actions so far have fallen far short of this mark.

The mind-blowing upshot: In a military conflict with China, the United States forces could find themselves fighting against, and taking casualties from, Chinese units and weapons that have been paid for and researched by their enemy. Is that the kind of first so many Americans voted for?

(What’s Left of) Our Economy: TPP Endorsed – by a Bush-ie!

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Asia-Pacific, CAFTA, Central Anerica Free Trade Agreement, China, Doha Round, foreign policy, George H.W. Bush, George W. Bush, Laura Ingraham, Lifezette.com, Robert B. Zoellick, technology transfer, The Wall Street Journal, TPP, Trade, Trade Deficits, Trans-Pacific Partnership, World Trade Organization, {What's Left of) Our Economy

One of the most obvious and most important developments of this jaw-dropping presidential campaign so far has been put succinctly by conservative talk-show host and Lifezette.com editor-in-chief Laura Ingraham: “Bushism is over.”

So now that even Republican and conservative voters have decisively rejected the politics and policies of the two Presidents Bush, who does the Wall Street Journal editorial board trot out to make the case for the new Pacific Rim trade deal Congress may soon consider? Archetypical Bush-ie Robert B. Zoellick.

But the choice of Zoellick isn’t only weird politically. It’s weird substantively. For although Zoellick’s government posts include serving as U.S. Trade Representative under George W. Bush, it’s hard to find the evidence that he knows anything about crafting trade policies that strengthen America’s economy, or about the theme of his May 16 article – the Trans-Pacific Partnership’s (TPP) alleged potential to help respond to national security challenges posed by China in the Asia-Pacific region.

After all, when it comes to trade policy generally speaking, Zoellick is the fellow who:

>during his four-year trade negotiating (2001 through 2004) stint saw the U.S. overall trade deficit shoot up by more than 56 percent;

>during his USTR tenure saw the U.S. non-oil goods deficit – the portion of American trade flows most heavily influenced by policy – jump by more than 48 percent;

>pushed a Doha Round global trade agreement expressly designed to benefit developing countries more than the United States; and

>established as his highest sub-global trade liberalization priority a deal with Central American and Caribbean countries whose total economies were no bigger than that of New Haven, Connecticut.

Nor can anyone call legitimately Zoellick’s foreign policy chops impressive, especially regarding China. He’s the fellow who:

>thought it was realistic to turn China into a “responsible stakeholder” in world affairs and the global economy;

>during his stint as chief U.S. trade policymaker, saw the United States transfer more than $472 billion in wealth to China in the form of cumulative trade deficits, which of course contributed to China’s economic and military strength;

>has said nothing about massive transfers to China of defense and cyber-security-related technology by U.S. multinational companies either while he served in George W. Bush’s administration or since then.

Zoellick’s article helps explain why American voters’ decision to kill off Bush-ism was amply justified. Its publication, however, shows that Bush-ism’s fatal flaws are still news to one of the nation’s major news organizations.

(What’s Left of) Our Economy: China Import Price Puzzles

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China, competitiveness, currency, currency manipulation, dollar, import prices, imports, Little Murders, manufacturing, multinational companies, productivity, subsidies, technology transfer, Trade, value-added taxes, VAT, yuan, {What's Left of) Our Economy

One of my favorite literary passages of all times comes from “Little Murders.” If you’ve never seen the stage or film version, I strongly recommend both, and for me, the high point of this late-1960s Jules Feiffer 1967 black comedy about life in a rapidly deteriorating New York City comes when Detective Miles Practice exasperatedly describes his frustration at solving a massive ongoing wave of violent crime.

The 345 unsolved homicides he and his colleagues are investigating have three characteristics in common, Practice explains. “A – that they have nothing in common; B – that they have no motive; C – that, consequently, they remain unsolved.”

I’ve felt a little like Detective Practice today as I’ve tried to dig deeper than usual into this morning’s new Labor Department data on the prices of imports bought by Americans in April. And it’s not just that the figures seem to undercut an argument I’ve made consistently during the ongoing debate over U.S.-China trade policy. It’s that the differences among various industries defy anything close to easy explanation.

As many of you surely know, since early in the previous decades, Chinese government policies that determine the value of its currency, the yuan, versus that of the U.S. dollar have been major bones of contention between the two countries. Essentially, many Americans have accused Beijing of keeping the yuan artificially weak, which gives Chinese-made goods unwarranted price advantages over their U.S.-made counterparts in markets all over the world. And if Made in China goods are outselling Made in America goods for reasons having nothing to do with market forces, then American production and jobs will be penalized for reasons having nothing to do with free markets, or free trade, either.

Because this issue has loomed so large for so long, I’ve been following the import prices figure closely in order to see how the yuan’s changing value has affected the actual price of Chinese-made products in the American market. And what I’ve found indicates that, although currency values matter a lot, these prices doubtless change for a variety of other reasons, too – including other forms of Chinese government interference with trade, but not limited to such protectionism.

For example, if the Chinese are making growing quantities of relatively advanced manufactured goods and selling them to Americans, and de-emphasizing less advanced goods, then the effects of Beijing’s currency policies could be (at least partly) masked by the higher prices these more sophisticated products presumably command. And in fact, I’ve shown that precisely this shift in Chinese manufacturing and exporting has been taking place, and argued that, as a result, precisely this masking effect is influencing the prices of Chinese imports. To me, it’s strong evidence that China’s yuan is still too cheap – even though for reasons we needn’t delve into now, China is now trying to prop up the yuan’s value.

Now, however, I’m not so sure. Because the detailed, product-by-product figures kept and reported by the Labor Department show that in many cases, prices of advanced manufactured products sold by China to Americans are falling faster than the prices of less advanced goods. Moreover, the prices of many Chinese products in the U.S. market are falling more slowly than those of comparable imports from other countries – which supports the idea that Beijing’s new currency stance is harming Chinese products’ price competitiveness.

Some caveats need to be made at this point. First, the number of manufacturing industries in which direct comparisons can be made between the prices of Chinese and other imports is relatively small – because the Labor Department issues detailed data for many more U.S. imports overall than for U.S imports from China. Second, some of the missing China data concerns industries where Beijing has encouraged massive overcapacity – notably steel – and clearly helped create significant (and worrisome) deflation.

All the same, most of the statistics I’ve found are real head-scratchers. For example, since the business press has been filled in recent years with articles on strongly rising Chinese wages, it’s not entirely surprising to see that the cost of imports of Chinese garments – a labor-intensive industry – have actually increased a bit since 2012 (the earliest China-specific figures available), whereas overall garment import prices are down.

But why have the prices of Chinese-made clothing been so much stronger, and less internationally competitive, than the prices of Chinese made machinery – an admittedly broad category but one in which the output is very capital-intensive, complex, and (I thought) relatively expensive? (Think boxer shorts versus machine tools.) In fact, on the whole, the more technologically advanced a Chinese product is, the faster its price is falling and the more price competitive it is with foreign rivals.

Rapidly rising productivity could easily explain this trend for Chinese information technology products like computers and semiconductors and communications equipment. But if that’s the case, then why do goods that are less advanced but hardly primitive – like fabricated metal products and household appliances – display the opposite characteristics? This is a special puzzle given that fabricated metal products contain so much steel – which has been so rock-bottom cheap in China for so long. And why are China’s chemical products (another broad category) able to cut prices so impressively and gain on their competition in the U.S. market, but not plastics products – which are a major category within chemicals?

Some tentative conclusions and possibilities:

First, these figures are a valuable reminder that even manufacturing industries that seem closely related can have enough differences to produce widely varying results

Second, some of this variation in Chinese manufactures could reflect their positions on the government’s priorities scale. In principle, the products that perform best price-wise could be the beneficiaries of the biggest government subsidies (including value-added tax rates, which are extremely granular) and research budgets. They could also be the sectors where Beijing exerts the greatest pressure on foreign investors to transfer their best technology.

Third, since much foreign tech transfer in China is still voluntary, the price gap illustrated above also could stem at least partly from different tech transfer approaches taken by multinational companies from different countries. For example, it’s widely believed that American companies that operate in China – and which are especially active in information technology – share their know-how with Chinese partners much more freely than do firms from Japan and Germany.

Even so, however, these import price figures raise many more questions than they answer, and they seem to be telling us that all of us need to be paying a lot more attention to them.

Following Up: How Intel May Wind Up Inside China’s Military

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China, cyber-security, Digitimes, Following Up, hacking, Intel, multinational corporations, national security, Obama, Office of Personnel Management, South China Sea, technology transfer, The New York Times, The Wall Street Journal

China keeps challenging American security interests, notably by staging damaging cyber attacks on key U.S. strategic and commercial targets, and by asserting territorial claims in Asian waters that could threaten global shipping and air traffic. And evidence keeps pouring in of U.S. technology companies showering China with valuable capital and defense-related know-how – and of a decided “What, me worry?” attitude taken by the Obama administration.

Last week, a post of mine summarized two recent New York Times articles reporting the beginnings of some concerns in the national security community about these dangerous corporate activities, along with a Wall Street Journal piece that summarized some especially troubling recent tie-ups involving entities part of or clearly controlled by the Chinese government.

This week, the Taiwanese publication Digitimes shed major new light on the American tech sector’s role in beefing up China’s capabilities in a piece focusing on Intel’s operations. According to Digitimes, by the end of this year, the world’s biggest semiconductor company will have committed nearly $1.80 billion to helping Chinese companies develop advanced new products and services. Just as alarming as the scale of this investment are some of the specific recipients.

Digitimes correspondents Monica Chen and Joseph Tsai report that the company now owns part of a Hong Kong company that makes unmanned aerial vehicles, and parts of firms in China proper involved in smart devices, robotics, cloud computing services, artificial intelligence, machine vision, three-dimensional modeling, virtual reality technologies, and advanced optics.

Every single one of these investments could easily find its way into Chinese weapons – which could easily wind up using them against the American military. But although tensions in the South China Sea may be rising, and the files of tens of millions of federal employees may have been hacked earlier this year, don’t tell any of Intel’s top executives or anyone making China policy for President Obama. For them, it’s clearly business as usual with Beijing.

(What’s Left of) Our Economy: Media Flattery for America’s Corporate China Lobby

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China, cyber-security, Financial Times, hacking, lobbying, multinational corporations, offshoring, protectionism, technology, technology transfer, The Wall Street Journal, {What's Left of) Our Economy

Even before checking out The Wall Street Journal this morning, I was going to post an item on some truly weird material quasi-buried in a Financial Times piece from last week. The Journal article, however, showed  that it’s become nothing less than vital to spotlight this latest instance of how the media spreads the most whoppingly one-sided information on many U.S.-China-related subjects in the most offhanded ways.

According to FT writers Geoff Dyer and Richard Waters in a September 11 piece on “High-tech diplomacy” between the United States and China, “The American business community once saw itself as almost a go-between in the US-China relationship, an embodiment of the two countries’ intertwined economic fates and a diplomatic actor that was sometimes able to take the edge off political arguments” and a “conduit between governments.”

More recently, they observe, the companies have “started to lean more heavily on Washington for support against Chinese policies that seemed designed either to shut them out of large sections of the Chinese market or pressure them to hand over key technologies.” And of course, the article dutifully quotes an “expert” from an American think tank (which happens to be heavily funded by such businesses) sympathetically describing the companies as “being pulled in many directions by both governments in what has become a much more complicated relationship….Most of them do not like being caught in the middle.” Who could help but feel their pain?

These offshoring companies have indeed been hoisted by Beijing on the petard of their longtime claims that expanding trade with China would greatly benefit the U.S. economy, too; that China was moving steadily towards Western business and even legal, and political norms; and that therefore Washington should mainly turn the other cheek in response to any continued economic predation by the Chinese. The firms also undoubtedly told the two FT reporters that they previously saw themselves as valuable diplomatic intermediaries – as is their right. And perhaps some executives actually believed that.  It’s true, moreover, that the FT didn’t present these descriptions as fact.

At the same time, because an alternative perspective was completely ignored, what else could a reader not steeped in these subjects conclude? And omissions like this matter, because what Dyer and Waters didn’t mention is all the evidence that American companies operating in China have actually served, and every effectively, as de facto lobbyists for a Chinese government. Their common interest? Preventing American officials from rocking the boat of bilateral economic relations in order to preserve profits both were reaping at the expense of domestic U.S. producers and their employees – aka the productive core of the American economy. For as the media has ignored ever since China trade issues have been stirring controversy, U.S.-owned firms whose products are made in China for export to the United States benefit every bit as much from Chinese subsidies and protectionism as Chinese-owned companies.

Where the Journal piece comes in is in providing crucial perspective about the growing number and volume of corporate complaints about China’s increasingly brazen protectionism. On top of refusing to support measures that arguably could counter China’s latest moves, the American firms – especially the tech companies – have massively caved to the pressure. As reported by the Journal’s Eva Dou and Don Clark (and as described by RealityChek for months), these companies are doubling down on their longstanding policies of transferring capital and, most important, cutting-edge technology, to Chinese enterprises. The FT referenced these moves, but only briefly, and deep into the second half of the article.

And by the way, if you look at the types of knowhow being provided to China (as I’ve been doing for years), it’s no mystery why it’s become so adept at hacking key U.S. government and private sector computer systems. In other words, reasons abound for viewing the corporations so indulgently portrayed in the FT not only as whiners, but as dangerously two-faced whiners.

No one should want the FT or any other news organization to take sides in this debate. But the media needs to do a much better job remembering that these giant companies already have their own flacks.

Im-Politic: Walker and Rubio Continue Republican China Pseudo-Hawk Tradition

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2016 elections, Asia, Asia-Pacific, China, cyber-war, defense spending, Im-Politic, Marco Rubio, Obama, offshoring, offshoring lobby, RealClearPolitics.com, Republicans, Scott Walker, South China Sea, technology transfer, The Wall Street Journal, TPP, Trade, Trans-Pacific Partnership

Two of the Republican party’s establishment presidential candidates have now spoken out in detail about America’s China policy; if timing is everything, they’d deserve A’s, given how Beijing’s erratic recent economic moves lie behind so much of this week’s tumult in world financial markets. Sadly, everything else about these statements simply repeats what’s become boilerplate for the Republican mainstream, and especially its Washington, D.C.-based Congressional leadership: (a) ringing calls to stand up more forcefully to increasingly aggressive Chinese behavior in East Asia and on the cyber-hacking front; and (b) thinly disguised excuses for coddling the ongoing predatory economic policies that have immensely strengthened China both economically and militarily.

Wisconsin Governor Scott Walker at least has an excuse. He has no significant foreign policy or international business experience other than hitting up Beijing for Chinese investments for his state and markets for its products and services (which, to be fair, is Standard Operating Procedure for governors).

Not surprisingly, he’s parroting the Boehner-McConnell – and, ironically, Obama – line that responding to China-related challenges (and opportunities) in Asia requires first and foremost approving the Trans- Pacific Partnership (TPP) trade deal.

At least in an article today on the RealClearPolitics.com website, Walker intriguingly left himself some Clinton-ian wiggle room on trade, calling for a TPP “that puts American workers first and levels the playing field. A deal that genuinely opens markets and ensures high standards for an area covering almost 40 percent of the world’s GDP….” In other words, he’s (reasonably) reserved himself the option of rejecting a final agreement if campaign considerations so dictate by claiming that it’s failed these litmus tests.

Nonetheless, Walker’s equation of concluding the TPP on the one hand, and restoring American “leadership” in Asia on the other – a staple of pro-TPP rhetoric – signals that he won’t be a terribly hard sell. Meanwhile, his reference to “high standards” suggests that he buys the bogus contention that the TPP can ensure that the Chinese and other Asians will wind up structuring their economies, and regional trade and commerce, along U.S.-style lines – even though even American allies in the region keep emphatically rejecting these norms.

More fundamentally, just like Washington’s Republican China pseudo-hawks, Walker would beef up America’s military response to Beijing’s regional muscle-flexing while apparently leaving intact its access to the global resources and technology that powers it. Thus, Walker would “rebuild our military strength in Asia. Defense sequestration must end, and our defense budget must return, at a minimum, to the level [at which] we can once again field a military that is fully equipped to keep the peace. We also need a vigorous shipbuilding program that puts Americans to work in service of our safety.” And he’d reinvigorate regional defense alliances that President Obama has allegedly permitted to decay.

But would Walker stand up to the mercantilism that has paid for so much of China’s military power, including cyberhacking capabilities that have resulted in “brazen attacks against the United States”? Not exactly. Walker declares that “we cannot allow [China], or any other nation, a free pass on unfair trade practices and the theft of our intellectual property.” But all he’ll say about his approach to these transgressions is “These are not insurmountable issues, and the more we can work together through difficult issues, the more people from both countries will benefit.”

But at least his article said something about the subject – as opposed to its treatment of corporate technology transfers. These practices, which have given China such formidable defense-related knowhow, were completely ignored.

Florida Senator Marco Rubio has no Walker-like excuses, but his Wall Street Journal op-ed today duplicates the shortcomings of Walker’s strategy almost to a tee. It’s true that, although Rubio actually voted for the TPP in the Senate, he doesn’t regurgitate the blather about the deal demonstrating America’s strategic commitment to and credibility in East Asia. In this piece, he portrays the agreement’s main benefits as economic, embodying “firmer insistence on free markets and free trade.”

But like Walker, Rubio would restore “America’s strategic advantage in the Pacific” with higher defense spending that would “allow us to neutralize China’s rapidly growing capabilities in every strategic realm, including air, sea, ground, cyber space and even outer space.” Also like Walker, Rubio would reinforce America’s ties with its Asia-Pacific allies.

Yet although Rubio promises that “if China continues to use military force to advance its illegitimate territorial claims…I will not hesitate to take action,” and even notes that Beijing’s military spending has been surging for years, like Walker, he says nothing serious about crimping China’s revenue and technology streams. On the one hand, Rubio accuses China of numerous major violations of global trade and economic standards. On the other, he would respond “not through aggressive retaliation, which would hurt the U.S. as much as China, but by greater commitment and firmer insistence on free markets and free trade” – i.e., the TPP. Apparently, despite his experience on the Senate Foreign Relations Committee, Rubio has yet to learn that export-dependent China has much more to fear from trade conflict than the still-largely self-sufficient United States.

For decades, America’s China policy has been sabotaged by leaders more dedicated to fronting for corporate offshoring interests and their profits-first approach to Beijing rather than promoting national interests. Their combination of military bluster and economic pablum makes clear that Walker and Rubio are offering more of the same.