Anti-China Crusade

President Trump and Europe must work together to confront China
By Josh Rogin

World leaders take part in a working session on the second day of the Group of 7 summit in Biarritz, France, on Sunday. 

BIARRITZ, France — The clear imperative for the Western world to come together and confront China’s rising internal repression and external economic aggression should have been enough to overshadow any differences between strained allies at this weekend’s Group of 7 meetings. 

But no such luck.
The members of the G-7 — which includes the United States, France, Britain, Germany, Italy, Canada and Japan — created this multilateral mechanism to bring to bear their joint economic power on the solution of great challenges. 

China’s economic expansion, fueled by various unfair trade practices and directly linked to the Chinese Communist Party’s political and strategic objectives, is unquestionably the free world’s greatest test.
But with blame assignable to both the Trump administration and European members of this once-vaunted group, the best anyone hopes for this weekend in this scenic French retreat is that the G-7 summit won’t devolve into another diplomatic disaster akin to what took place in Canada last year.
President Trump hammered home his criticisms of China’s economic aggression before he even got on the plane, ordering U.S. companies to start looking for ways to leave China, raising tariffs on Chinese goods and calling out Beijing on its rampant intellectual property theft.
On Friday, President Trump referred to his confrontation with China over its economic aggression as “more important than anything else right now — just about — that we’re working on.”
Here in France, most media reports focused on President Trump’s offhand remark that he has had “second thoughts” on everything, including his trade war with China. 

But President Trump was not expressing regret or signaling a change in policy. 

In the same series of questions, he said about the trade war: “It has to happen.”
The president is escalating pressure on China even though that puts his economic accomplishments at risk. 

Make no mistake, he’s committed to seeing this through.
President Trump’s confused messaging is counterproductive. 

But his basic thrust is on point. 

China must change its predatory economic and industrial policies, by persuasion or pressure. 

If the Chinese government won’t play by basic international rules, Western free-market democracies will have no choice but to defend themselves through disengagement and decoupling that will undoubtedly have negative collateral economic consequences.
Any honest analysis must acknowledge that the Chinese government has not yet changed its behavior and that therefore President Trump’s strategy has not yet worked. 

But it’s obvious the chances of success would rise dramatically if European allies were on board.
Yet despite the fact that Europe faces the exact same threat from China’s economic aggression, European leaders here in Biarritz are saying that the onus for ending the trade war is on Washington, not Beijing.
French Emmanuel Macron said he wanted to persuade G-7 leaders (meaning President Trump) to “avoid this trade war” and reduce tensions. 

British Boris Johnson said he didn’t like tariffs and wanted “trade peace.” 

European Council Donald Tusk warned that President Trump’s use of tariffs “as a political instrument” could cause a global recession. 

None of them mentioned China’s role in the dispute or its resolution.
President Trump could blunt criticism of his China tariffs by backing off his concurrent tariff threats on our allies. 

The administration should focus on persuading European countries to join the pressure campaign against China, which is the real trade priority.
Privately, many European officials hope their countries’ stagnant economies might benefit from the U.S.-China fight, as companies from third countries pick up the business American companies leave behind. 

Also, European countries that want money from China’s One Belt, One Road initiative don’t want to anger the Chinese Communist Party before their checks clear.
A more diplomatically savvy Trump administration might point out to Europeans that China’s economic aggression comes at the expense of Europe’s own goals and interests, including confronting climate change, promoting sustainable development and protecting free markets.
The Trump administration also needs to offer European countries more real alternatives to Chinese development funds, which almost always come with political strings, corruption and ecological consequences.
According to White House read-outs, Trump discussed Hong Kong and the technology giant Huawei with his G-7 counterparts. 

What’s missing is a Trump administration explanation of how China’s crackdown on dissent and its predatory economic expansion are two parts of the same Chinese Communist Party strategy, namely to undermine and eventually supplant the free and open international order the United States and European economies depend on.
The bottom line is that President Trump and Europe must make up and find a way to get along, at least for the next year and maybe for four more years after that. 

There will be no joint statement at this year’s G-7 because there’s no consensus on what the G-7 stands for. 

But China’s economic aggression is exactly the kind of generational challenge the G-7 was designed to confront.

Michael Pillsbury Gains Prominence as President Trump Confronts Xi on Trade

By Alan Rappeport

Michael Pillsbury has spent years trying to understand China’s motivations. His realist view has made him one of President Trump’s top advisers on how to interact with Beijing.
WASHINGTON — Michael Pillsbury had just finished a rib-eye salad at the Cosmos Club on Tuesday when he received a text message from the White House: “The president is trying to reach you. Call back.”
A day later, Pillsbury huddled in the Oval Office with President Trump and senior members of the White House economic team ahead of a pivotal weekend meeting in Argentina between President Trump and Xi Jinping.
For more than an hour, President Trump, Pillsbury and advisers including Steven Mnuchin, Wilbur Ross, Larry Kudlow, Jared Kushner and Peter Navarro, who joined remotely from California, strategized about negotiations with China that could determine the direction of a trade war that has gripped the world’s two largest economies, spooked global markets and shaken diplomatic relations between Beijing and Washington.
President Trump and Xi are expected to dine on Saturday evening at the G-20 summit meeting in Buenos Aires, where they will talk about the possibility of a trade truce. 

The United States has imposed tariffs on $250 billion worth of Chinese imports, and the rate of some of the levies is set to increase to 25 percent in January, from 10 percent. 

President Trump has threatened to impose tariffs on all Chinese imports — an additional $267 billion — if a compromise cannot be reached.
President Trump has received conflicting advice from his trade team about how to approach China but it is Pillsbury’s counsel that the president is most likely to keep in mind.
He has emerged as a key sounding board for President Trump, who has publicly referred to Pillsbury as “the leading authority on China” on multiple occasions. (Three times, by Pillsbury’s count, who said sales of his 2015 manifesto on China have soared as a result.)
Ubiquitous on Fox News in recent months, Pillsbury’s book “The Hundred-Year Marathon: China’s Secret Strategy to Replace America as the Global Superpower” has become a lodestar for those in the West Wing pushing for a more forceful response to the threat that China’s rise poses to the United States.
“We could not have shifted the entire apparatus to this confrontational mode with China if it wasn’t for the intellectual architecture of ‘A Hundred-Year Marathon,’” said Stephen K. Bannon, President Trump’s former chief strategist who recruited Pillsbury as an adviser during the transition and used to hand out copies of his book around the White House.
The book, which was published while Pillsbury was advising the Obama administration as a Pentagon consultant, presents an accurate view of China as a clever enemy with a stealthy plan to overtake the United States as the dominant world power by 2049 — a century after the People’s Republic was founded.

In his book, Pillsbury describes China’s approach as one of deception, in which its leaders use America’s belief that it can democratize China to “mislead and manipulate American policymakers to obtain intelligence and military, technological and economic assistance.”
Pillsbury plays into this argument with President Trump, arguing that the clash between the United States and China has evolved precisely because President Trump’s agenda to restore America’s “greatness” is so directly at odds with Xi’s own political doctrine for modernizing China, known officially as “Xi Jinping Thought.”
“They take ‘Make America Great Again’ very seriously,” Pillsbury, referring to the Chinese, said in an interview this week. 

“To them, it’s a violation of the new model of great power relations, it’s a violation of the new era and it’s a violation of ‘Xi Jinping Thought,’ if you will.”

Tall, bald and broad-shouldered, Pillsbury has served the United States government in varying levels of prominence as a Chinese and national security expert in administrations dating to Richard Nixon’s. 

Fluent in Mandarin with a doctorate in political science from Columbia University, Pillsbury, 73, gained notoriety among China specialists for his ability to gain access to Chinese intelligence and military officials and his knack for finding and translating archived documents that shed light on China’s thinking.
And, like some of those in the Trump administration, Pillsbury also once considered himself a “panda hugger” — someone who thought that China could become an economic and political ally whose growth should be supported.
But Pillsbury began to take a darker view of China — and its ambitions — later in his career, after interviews and discussions with top military and intelligence officials in Beijing. 

And he has found a soul mate in President Trump — whose relentless desire to upend America’s trade relationship with China and protect domestic power has produced a trade war that has no natural path to resolution.
Pillsbury was brought into President Trump’s orbit during the transition period in 2016, after the president-elect spoke by telephone with Taiwan’s president, breaking protocol and angering China.
He has worked closely with Matthew Pottinger, the senior director of Asian affairs on the National Security Council, and the White House considered offering him a formal role, according to a former official, but there were concerns about his ability to get a security clearance. 

Pillsbury said that it remained a possibility and that he would like to be the ambassador to China someday.
As President Trump increasingly blurs economic security and national security — viewing China’s economic rise as a national security threat to America — Pillsbury’s knowledge of China has become even more in demand.
President Trump’s economic team is deeply divided on how to approach China, with nationalists like Mr. Navarro and Mr. Robert E. Lighthizer, President Trump’s top trade negotiator, often clashing with Mnuchin, the Treasury secretary, and Kudlow, the director of the National Economic Council, who have offered pro-China approaches.
Pillsbury, whose realist view of China has found resonance, tries to explain to White House officials that China’s leadership has its own internal divisions and advises President Trump on how to leverage those splits to gain an advantage, he said.
When Mr. Navarro, with whom he plays tennis and who featured him in his movie “Crouching Tiger,” asked him how to rankle the Chinese earlier this year, Pillsbury begrudgingly told him that using the term “economic aggression” would grab their attention because the word “aggression” has a more sinister meaning in Mandarin.
In June the phrase was emblazoned in the title of a White House report on China’s intellectual property practices.
In practice, Pillsbury offers more nuanced prescriptions for responding to China’s march to global dominance. 

Others in the administration, including Vice President Mike Pence and Mike Pompeo, the secretary of state, have openly clashed with the Chinese.
“To try to get them to sign a piece of paper saying they’ve done all these bad things is futile,” Mr. Pillsbury said. 

“It gets back to the goal of the president. If the goal is to humiliate the Chinese and tell the base we’re stopping this raping of our country, this approach won’t work.”

Pillsbury’s more doveish tone is part of an effort to stay in the good graces of the Chinese. 

He has traveled to China four times in the last 18 months and is planning to go again in December, when he will share insights about the United States with Chinese think tanks.
Consulting and writing have made for a lucrative career for Pillsbury, who is working on another book and has mused about a movie of his own. 

He lives in a $7.5 million Georgetown mansion with his wife, a British-born ballerina who was a member of the Royal Ballet Corps, and they own a well-curated collection of Asian art. 

For recreation, he flies a small Cessna, which he crashed last year during a landing in Maryland. 

He was unhurt.
These days, Pillsbury likes to boast — with a smile — that he has become a “humble, modest fellow.”

Make China Small Again

President Trump’s China Policy Is a Triumph.
The president's trade war is bringing Beijing to heel.
BY GREG AUTRY

U.S. President Donald Trump speaks at a rally on February 22, 2016 in Las Vegas, Nevada. 

U.S. President Donald Trump’s aggressive approach to China has been the most credible and consistent policy of an often-criticized White House.
The president’s assertions of Chinese malfeasance in trade matters are undeniably true.
Even CNN’s Fareed Zakaria, no fan of the president, has said, “Donald Trump is right: China is a trade cheat,” going on to praise the U.S. trade representative’s exhaustive report on China’s World Trade Organization noncompliance as a rare example of a quality document from this administration.
Despite dire warnings from establishment economists and media pundits that getting tough on China would damage the U.S. economy, we have seen nothing of the kind.
The United States is not simply surviving the trade war but has thrived through two years of global stagnation.
In the meantime, as best as can be told from highly unreliable and often-faked data, Chinese economic growth has stalled.
The hard-line U.S. policy has been effective and should be maintained until China demonstrates real, substantial behavioral change such as no longer requiring forced joint partnerships and ceasing its vast state-run cyberespionage program. 
Holding Beijing accountable for its treatment of its own citizens isn’t too much to ask either.
Then-President Bill Clinton’s fateful decision to disconnect U.S. human rights policy from trade deals in 1993 removed America’s most powerful instrument for producing good in the world. 
As George W. Bush and Barack Obama subsequently adopted Clinton’s “business is business” policy, the Chinese Communist Party learned to exploit a complacent Western media to whitewash its authoritarianism, militarism, and repression and greenwash its environmental depravation.
Lazy American journalists eagerly reprinted half-truths generated by D.C. think tanks funded by the multinational corporations growing rich on the China trade, as well as quotes from professors at universities addicted to foreign student tuition fees and wealthy Chinese donors. 
Those who criticized China, as I did, were marginalized, maligned, and censored. 
U.S. firms such as Google and Home Depot found their attempts to actually access the promised mega-market wrecked by a system tilted in favor of China’s domestic champions.
Still, the horrors of Tibet and Tiananmen were obscured by iPhones and corporate profits. 
Today, Americans enjoy movies from U.S. studios whose scripts are written to avoid offending the Communist Party and are blissfully unaware that over a million Chinese citizens are being brutalized in “re-education” camps designed to deprogram their religious identities.
President Trump holding China’s hypersensitive authoritarians accountable to international standards of decency in trade was a badly overdue act of bravery, and one that perhaps only an unabashedly indiscreet leader could pull off.
The very public shaming of Beijing over its blatantly closed markets, transshipment of products, export subsidies, abuse of joint partnerships, espionage, and technology theft has revealed the party’s claims as a sham. 
All of these facts are superbly documented in the aforementioned Office of the U.S. Trade Representative report and in the White House Office of Trade and Manufacturing’s report on China’s economic aggression.
The emperor’s imaginary clothes vanished in a wink.
The promise implied by former U.S. Secretary of State Henry Kissinger and others that appeasing and enriching China’s brutal despots would align them with U.S. interests or liberalize them can no longer be defended with a straight face. 
Over the last two years, establishment pundits shifted from spouting nonsense about China’s inevitable progress toward capitalism and democracy to asking whether tariffs are the right way to confront a dangerous regime we all agree is built on lies and cheating.
The initial results are now in.
The current trade policy has demonstrated its effectiveness, and it is undermining the Communist Party’s only source of legitimacy: ill-gotten economic growth. 
And on the U.S. side, it’s going to be easier to maintain than most people think.
The U.S. market remains the most valuable economic prize on Earth, something this week’s annual Black Friday consumption-fest underscores.
It is, by far, the world’s largest economy, with a 2017 GDP of $19.4 trillion.
That’s at least 60 percent larger than China’s $12.2 trillion and probably a lot more, as China’s dubious GDP figures bend to fit official targets.
Since consumption forms a much larger part of American GDP, the U.S. market for goods is many times larger than China’s.
The United States is also the healthiest major economy, with robustly increasing GDP growth and the lowest unemployment rate in nearly 50 years.
China is not likely to catch up in our lifetimes.
Additionally, the United States has a much smaller population dividing those spoils—and being less burdened by taxes than their global counterparts, U.S. consumers can spend far more than the citizens of any large nation.
Most importantly, China is paying the lion’s share of America’s tariffs.
While advocates of "free" trade have worked hard to scare consumers with threats of huge price increases, these have not emerged.
This is because any additional cost incurred in the distribution of a product may be allocated to either the consumer, through higher prices, or to the producer, through lower margins.
The market determines this split as consumers demonstrate their tolerance for absorbing higher prices.
The elasticity of demand for products determines the price, and a recent European study by EconPol concludes, “A 25 percentage point increase in tariffs raises US consumer prices on all affected Chinese products by only 4.5% on average, while the producer price of Chinese firms declines by 20.5%.” 
And don’t forget that the entire 25 percent goes into the U.S. Treasury, feeding America’s economy, not China’s. 
If Chinese prices eventually do increase, the same system will force distributors and retailers to absorb the cost before consumers.
Their suppliers are already moving to non-China sources.
Significantly, none of this success is accidental.
Many of this administration’s political appointments have been criticized, and the president has removed several of them.
President Trump has even publicly expressed regret over his appointment of Steven Mnuchin as treasury secretary.
In contrast, the team at the White House National Trade Council, the Department of Commerce, and the Office of the U.S. Trade Representative have been brilliantly strategic in the face of a relentless, China-backed media attack on the trade policy. 
The EconPol researchers recognized this when they wrote, “The US government has strategically levied import duties on goods with high import elasticities.”
Whether or not you agree with the tactics crafted by White House trade advisor Peter Navarro (with whom I wrote a book), Commerce Secretary Wilbur Ross, and U.S. Trade Representative Robert Lighthizer, this operation has been professionally planned and executed.
Knowing that China would quickly move to disguise its products in transshipments, the Trump team expertly renegotiated complex deals with South Korea, Mexico, and Canada in record time. 
A critical and disorganized Europe has been left scrambling to reassess its China relations, lest its market become the dumping ground of last resort.
Investors buying in to the media prattle that U.S. trade policy has been ill-informed or that soybeans are somehow more important to the United States than technology do so at great peril.
In the face of this success, free trade backbiters are now calling for negotiations.
If you are under any delusion that this time, the Chinese government will take a trade agreement with the West seriously, I encourage you to read Articles 33 through 41 of the Chinese Constitution, which reads like the U.S. Bill of Rights.
This document specifically protects human rights, freedom of religious beliefs, freedom from illegal arrest, freedom from unreasonable search, freedom of speech, and the right to vote and protest. 
None of these things actually exist. 
Like the regime’s official name, the “People’s Republic,” rule of law in China has always been a lie the West agreed to accept. 
The Chinese Communist Party does not respect the rule of law—it respects strength and power.
The U.S. president and his team should stay the course, both for America’s sake and for China’s. Reducing the economic influence of an aggressive authoritarian regime is the right thing to do for the world and, eventually, for the Chinese people. 
They shouldn’t bother with an agreement designed only to delay the other side and that will never be honored.
The new Democratic majority in the lower house of the U.S. Congress and establishment Republicans who otherwise oppose the president should re-evaluate the current trade policy in light of the positive empirical results and eschew the illusory arguments of those who benefit from enriching a dangerous and tyrannical regime.

Sina Delenda Est

The United States is finally confronting China’s economic aggression

By Josh Rogin

U.S. Trade Representative Robert E. Lighthizer testifies on trade policy before the House Ways and Means Committee at Capitol Hill on March 21. 

Lost in last week’s coverage of tariffs and trade deficits was the Trump administration’s landmark decision to confront China’s unfair and illegal practices that threaten our economic security.

It’s the opening salvo of the key economic battle of the 21st century and part of a worldwide struggle the United States must lead.
The Chinese government’s strategy to amass control of critical technologies while undermining the rules-based trade system built by the United States and its partners will be hard to combat. 

Exactly how the administration plans to tackle the task remains unclear. 

But the implications of that long-term project reach far beyond the short-term battle over tariffs or deficits now brewing between Washington and Beijing.
The Trump administration is now basing U.S. policy on a recognition that the massive scale of China’s technology transfer effort cannot be addressed with the usual levers of trade policy. 

That means the United States and other countries will have to respond with new tools and a new attitude.
“Technology is probably the most important part of our economy,” U.S. Trade Representative Robert E. Lighthizer said Thursday. 

“And we concluded that, in fact, China does have a policy of forced technology transfer; of requiring licensing at less than economic value; of state capitalism, wherein they go in and buy technology in the United States in non-economic ways; and then, finally, of cybertheft.”
Lighthizer released the results of a months-long investigation by his office meant to form the basis of the new U.S. response. 

Its findings confirm what academics and the private sector have long known. 

His office estimates that Chinese illicit practices rob the U.S. economy of at least $50 billion annually. 

A bipartisan commission chaired by retired Adm. Dennis Blair and former Utah governor Jon Huntsman estimated the loss to the U.S. economy due to intellectual property theft overall to be between $225 billion and $600 billion annually. 

The commission’s 2017 report named China as the “principal IP infringer.”
The administration plans new tariffs and will bring a case against China at the World Trade Organization regarding discriminatory licensing practices. 

But officials told me that the real game changer is yet to come, saying that the administration will soon announce restrictions on Chinese investment in a range of technology and other critical sectors.
While the specific actions haven’t been finalized, expect executive actions aimed at preventing Chinese state-controlled companies from swallowing up U.S. technology firms, stopping U.S. companies from handing over key technologies to China and working to persuade other Western countries to do the same.
The Senate is sitting on legislation to reform the Committee on Foreign Investment in the United States to cover new industries and fix loopholes. 

The administration is already increasing actions to prevent Chinese firms from purchasing U.S. companies crucial to our technological infrastructure or that control personal information of Americans.
Make no mistake, these are deviations from normal practice to single out China — for good reason. For one, Chinese firms are increasingly connected to the Chinese government, serve the political objectives of the Chinese Communist Party and are the beneficiaries of massive subsidies and protectionist benefits given by Beijing. 

In essence, China has politicized its entire economy.
There was a belief that China would develop a private economy that would prove compatible with the WTO system. 

Chinese leadership has made a political decision to do the opposite. 

So now we have to respond.
“The Chinese are engaged in a fundamental attack on the principles of free trade,” said Derek M. Scissors of the American Enterprise Institute. 

“They are not close to free traders, so we are not obligated to abide by free trade. We are overdue to confront China on this.”
Given the stakes and risks, the next U.S. moves must be smart and strategic. 

If this really is the economic battle of the future, the United States needs allies in the fight. 

Alienating partners with tariffs on steel and aluminum at the start of this journey was a counterproductive distraction. 

European countries face the same threat from China but need to be brought along via positive U.S. engagement. 

Persuading them to join America’s new WTO case would be a good start.
Overreach is also a risk. 

Some Chinese investment in the United States is positive, and defining which sectors to protect is key. 

Our issue is with the Chinese Communist Party.
There must also be a dialogue with Beijing to offer it the opportunity to change its behavior, abide by its international commitments and build reciprocity into the U.S.-China economic relationship.
This new effort to prevent China from unfairly moving to dominate the industries of the future is complex, risky and sure to have unintended consequences that will have to be managed over time. But the future of our economy depends on its success.