by Jon Schweppe
With China’s decision to close negotiations with the U.S. following House Speaker Nancy Pelosi’s Taiwan visit, it’s fair to ask how the U.S.’s rapport with the People’s Republic got to this tense point in the first place.
The actor Dennis Quaid said his involvement with cocaine had three stages: “the fun, the fun with problems, and then just the problems.”
That’s not so different from America’s relationship with China. It was fun at first breaking the spell of no relations with our first attempts at detente and trying to bring the Chinese into the world of freedom by incorporating them into trade and high finance.
Then it was fun with problems. China did take the West up on its offer by opening trade and finance. American companies made billions selling in this huge market which, thanks to embracing some Western economic ideas, was becoming more prosperous.
But China didn’t fully reciprocate. Back home, U.S. firms began to lose out to Chinese firms that could operate with few regulatory restraints and lower labor costs. America began to find itself selling things it did not make and the makers of those products found themselves trying to learn to code.
Moreover, China didn’t make this large and growing market available to American companies for free. It demanded a seat on the board and in management for people who were members of the Chinese Communist Party and allies of the regime. That way, it learned how the company was managed and marketed and how exactly it made its product.
These board members and managers then would form Chinese companies that could get the raw materials from other Chinese companies at prices available only to Chinese companies — stealing the technology and squeezing the competitor by government fiat.
The Trump administration made some progress in stopping this massive transfer of intellectual property by using targeted tariffs and pressing the Chinese to drop requirements that CCP members be on boards and management teams.
We even have national security contractors working with and within China.
Take, for example, SpaceX and Tesla CEO Elon Musk, who has had his own “the fun, the fun with problems, and then just the problems” progression with the Chinese. First, it was loans from the China Construction Bank, the Agricultural Bank of China, the Industrial and Commercial Bank of China, and the Shanghai Pudong Development Bank. Then, it was 5 percent of Musk-owned Tesla going to Tencent, the Chinese conglomerate. Then, it was still fun opening a new Tesla showroom in the same community as a Uyghur prison camp. Now there are problems. The Wall Street Journal has reported that Musk’s China ties are “causing unease in Washington, including among some Republican lawmakers who have been among the billionaire entrepreneur’s ardent supporters.”
By allowing these companies — Nike, Disney, Tesla, and the like — to do business in China, is the U.S. promoting slavery and the general mistreatment of the Uyghurs? What do we know and what does China require us to share? Are we compromising U.S. national security?
The U.S. relationship with China has reached the problem stage. Free trade and U.S. corporate chumminess did not make China a free country, it made it a more powerful and dangerous one. Western democracies have created unprecedented levels of freedom and prosperity in the last century, but unless things change, China’s way of managing societies — far more forceful, far less tolerant — could well emerge as the dominant model in this century.
It’s a clash of ideas and diplomacy now, but as recent threatening behavior from China around Taiwan illustrates, it may be closer to becoming hotter than we know. Our response must be comprehensive and cogent.
It will mean increasing defense capabilities, intensifying diplomatic pressure, and insisting on protections for intellectual property. But it also will mean our government will have to get a handle on the relationships between U.S. corporations — especially those that involve national security — and the Chinese Communist Party.
Because, like Quaid’s problem, it can be deadly if not addressed.
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Jon Schweppe is the policy director at American Principles Project. Follow him on Twitter: @JonSchweppe.
Photo “Made in China Products” by ThiNguyen2021. CC BY-SA 4.0.
