China seeks to acquire US' crown jewels of technology: White House
China seeks to acquire the crown jewels of American technology through theft, forced transfer, information-harvesting and acquisition, the White House said today, a day after President Donald Trump threatened to slap tariffs on USD 200 billion worth of Chinese goods.
Trump, pursuing his 'America First' policy, has been insisting that China has been unfairly benefitting from a massive trade imbalance with the US, now estimated to be USD 376 billion.
"China seeks to acquire the crown jewels of American technology, including ag-tech, through six vectors," Peter Navarro, White House Director of Trade and Industrial Policy told reporters during a conference call.
These six vectors are physical theft and cyber theft; forced technology transfer, typically as a condition of access to the Chinese market; evasion of export controls; export restraints on raw materials; information-harvesting campaigns designed to acquire and exploit the openness of our economy. An acquisition of crown jewels by state-backed funds that basically, scour places like Silicon Valley, Austin, Boston and beyond, for the best of what the US have in industries like artificial intelligence, block chain technology, robotics, high-tech manufacturing and high-tech shipping, Navarro said.
"These, in fact, are the Made in China 2025 industries that China, with one-fourth of the world's population, wants to control 70 per cent of the production of by 2025," he said.
Collectively, these six behaviours constitute what December 2017 National Security Strategy refers to as economic aggression, he said.
"Much of this behaviour is outside international norms, and it is critical, both to the interests of the United States, as well as for the integrity and proper functioning of the global economy, that China cease these kinds of behaviour, and integrate its own non-market economy into the global trading system in a way that leads to fair, balanced and reciprocal trade," Navarro said.
"As President Trump has said, this nation supports free and fair trade, but it will not support fool's trade," he said.
Asserting that Trump has given China every chance to change its aggressive behaviour, Navarro said there was a clear linear path that begins with candidate Trump's famous job speech in June of 2016, in which he explicitly promised to take action under Section 301 if China failed to stop its attacks on its manufacturing and innovation base.
"Once President Trump took office, the next point on that linear path was the Mar-a-Lago summit, in which all of these issues related to China's trying to acquire intellectual property were addressed at that summit, and there was 100 days that followed in which China was supposed to come up with proposed structural changes to address these. They did not," he said.
"There's also the special trip the president's trade team took to Beijing to discuss these matters, which resulted in no progress. The Chinese delegation then came here to the Treasury Department. Again, no progress," he said.
Navarro said that none of these efforts by the president and his team had resulted in any progress on the two core issues facing the US-China relationship: the need to reduce massive trade deficit, which represents an equally massive transfer of wealth, factories and jobs to China.
Also more importantly for this country's economic future and national security, China's bid to acquire the crown jewels of American technology and intellectual property by any means necessary, by the six different vectors.
Actions of Trump are purely defensive in nature and are designed to defend the crown jewels of American technology from China's aggressive behaviour, he added.
"We have seen in the past what has happened to our industries from China's aggressive behaviour. China's predatory resulted after China joined the World Trade Organisation in 2001, and many of our traditional manufacturing industries basically going to China," he said.
China has more than 50 per cent global share of air conditioners, appliances, colour TV sets, computers, electronics, machine tools, microwaves, mobile phones, refrigerators, solar and wind, steel, cement.
Trump will not allow China to use the same kind of unfair trade practices and illicit behaviour to capture the so-called Made In China 2025 industries, which China has said that it wants to acquire, absorb, digest and re-innovate, he said.
"These are the future of the world and of America, and China cannot have 70 percent of production of these industries by 2025," he said.
Asserting that the US is not backing off, Navarro said that China has much more to lose in this trade dispute than the United States.
"If you simply do the numbers, we imported about USD 500 billion worth of China's exports in 2017, and we exported only USD 130 billion to China. We had initially USD 50 billion in tariffs that were very carefully targeted, simply to defend in the China 2025 industries," he said.
"What the president did yesterday in announcing an additional USD 200 billion, it's clear that China does have much more to lose. What we have at stake is USD 130 billion going to China. What they have at stake is over USD 500 billion coming to us," Navarro said.
He conceded that this trade dispute will lead to relatively small effects where the two economies that collectively add up to about USD 30 trillion in annual GDP.
China's behaviour has created a huge structural imbalance in the world economy and lead to this massive wealth transfer to China, not just from US, but from Europe, Japan and from wherever else China is able to acquire technology from and it needs to be addressed.
"If our companies are able to operate in China without fear of losing their technology, if our companies are able to operate here without the fear of Chinese cyber agents coming in and stealing the trade secrets, intellectual property and other things, this economy will be stronger, the global economy will be stronger and we will have a much better relationship," Navarro said.