US Needs Assist from Allies to Curb China’s Theft of Advanced Technology

By Nike Ching and Hongshen Zhao
Senate Intelligence Committee Vice Chairman Mark Warner, D-Va., shake hands with FBI Director Christopher Wray as CIA Director Gina Haspel looks on before the Senate Intelligence Committee hearing on Capitol Hill in Washington, Jan. 29, 2019.

Senior U.S. officials and experts say the United States needs to rally allies to pressure China stealing advanced technology through cyber espionage.

At the same time, key American lawmakers are questioning the readiness and capacity of the U.S. to counter such threats.
The renewed push comes after U.S. federal prosecutors pressed criminal charges against the world's largest telecommunications company — China's Huawei Technologies — its chief financial officer and several subsidiaries for financial fraud and theft of U.S. intellectual property.

The Trump administration said Washington is deeply concerned about the potential of Beijing using Chinese technology firms to spy on the U.S. and its allies.
Director of National Intelligence Dan Coats testifies to the Senate Intelligence Committee hearing about worldwide threats on Capitol Hill in Washington, U.S., Jan. 29, 2019.

"China's pursuit of intellectual property, sensitive research and development plans, and the U.S. person data remains a significant threat to the United States government and the private sector," Director of National Intelligence Dan Coats told lawmakers at a Senate Select Committee on Intelligence hearing on Tuesday.
Other officials, including Assistant Secretary of State for International Security and Non-proliferation Christopher Ford, advocate for a global coalition against Chinese technology-transfer threats.
At another hearing, experts said threats that Huawei poses to supply chains and critical infrastructure are absolutely real.
"We need defensive measures and we need to invest in our own technologies as well, and we need to be cooperating with allies and partners," said Ely Ratner, who was deputy national security advisor to former Vice President Joe Biden.
"We know that the Huawei leadership has members of the Communist Party within it, and the company has a long and deep relationship with both PLA and the Ministry of State Security in China. And of course is subject to Chinese law and their new National Intelligence law which gives the government the right to use the networks and data as they wish," added Ratner at a Senate Armed Service Committee hearing.
Former Deputy Assistant Secretary of Defense Elbridge Colby warned that China may gain "economic, informational, and blackmail" leverage over other countries through data collected by companies such as Huawei.
"This dissolves or corrodes the resolve in these countries potentially to stand up to Chinese potential coercion," Colby told senators.
"We need to be able to form a network that is sufficient and cohesive to stand up to these Chinese threats," he added.
Bipartisan senators have been pushing for the creation of a White House office to fight China's state-sponsored technology theft and defend critical supply chains.
Senator Marco Rubio questions witnesses before the Senate Intelligence Committee hearing about "worldwide threats" on Capitol Hill in Washington, Jan. 29, 2019.

"China is currently attempting to achieve technological and economic superiority over the United States through the aggressive use of state-directed or state-supported technology transfers," said Senator Mark Warner (D-VA) and Senator Marco Rubio (R-FL) who introduced a bill to fight China's technology threats earlier this month.
"A national response to combat these threats and ensure our national security has, to date, been hampered by insufficient coordination at the federal level," added Warner and Rubio in a statement.
Senate Intelligence Committee Vice Chairman Mark Warner, D-Va., speaks during the Senate Intelligence Committee hearing on Capitol Hill in Washington, Jan. 29, 2019.

Under the bill, the Office of Critical Technologies & Security would coordinate with federal and state regulators, the private sector, experts and U.S. allies to ensure that every available tool is being utilized to safeguard the supply chain and protect emerging dual-use technologies.

Nation of Cheaters

How does China cheat on trade? Let us count the ways
By Steven W. Mosher 

Dr. Peter Navarro and Gordon Chang

Aside from President Trump himself, Peter Navarro arguably has the toughest job in the White House.
You see, Dr. Navarro directs the White House Office of Trade and Manufacturing Policy. 

He comes to work every day to be greeted by new evidence of China’s no-holds-barred economic war against the United States, from its cheating on trade to its theft of intellectual property.
His findings are summarized in a new report entitled, “How China’s Economic Aggression Threatens the Technologies and Intellectual Property of the United States and the World.”
The report itself is 36 pages long, but I can summarize it in two words: China cheats.
China cheats by protecting its home market from American imports with high tariffs, tricky non-tariff barriers, and costly, constantly changing regulations.
China cheats by subsidizing the exports of government-owned “national champions” to crush its free market competitors and dominate global markets.
China cheats by preying on weak counties, locking up their natural resources with “debt traps” in an obvious effort to gain a global stranglehold on key resources like bauxite, copper, nickel, and rare earths. 

These monopolies are not only being used to fuel China’s industrial machine, but to punish those countries who would oppose its predatory policies.
China cheats by subsidizing manufacturing with cheap loans and cheap energy, and also by turning a blind eye to environment, health and safety standards. 

Because of its cheating, it already dominates industries ranging from ship production and refrigerators, to color TV sets, air conditioners, and computers.

Above all, China cheats by stealing key technologies and intellectual property from the United States and other countries. 

These activities range from cyberespionage and forced technology transfer down to massive open-source collection and plain-old physical theft.
Suffice to say, if you can imagine a way to steal intellectual property, the Chinese Party-State already has an official government program in place to do just that.
The point of all this cheating is not hard to understand. 

China wants to capture the emerging hi-tech industries of the future with one goal in mind: to replace the United States as the world’s dominant power.
This is President-for-Life Xi Jinping’s “China Dream,” and it is revealing that he no longer hesitates to admit it.
The old rule in Communist Party circles was that China should “bide its time and hide its capabilities.” 

This rule, laid down by Paramount Leader Deng Xiaoping in the 1980s, presupposed that China’s success lay in stealth.
Deng intended that China would quietly gain ground on the reigning superpower, the United States, without alarming it. 

His rule was carefully followed by successors Jiang Zemin and Hu Jintao.
But the economic malaise of the Obama years convinced many in Beijing that America’s best days were behind it. 

Believing that China’s time has come, Xi Jinping no longer bothers to bide his time or hide China’s capabilities.
Xi’s openness about his global ambitions tells us something very important: He believes China’s future dominance is virtually a foregone conclusion.
Peter Navarro’s report tells something equally important: That China is engaging in unrestricted economic warfare—violating every agreement on patents, trade, and intellectual property it has ever signed -- in order to achieve this goal.
The China threat has become so obvious that even many Democrats support Trump’s tough policies on trade. 

Even Chuck Schumer, who seemingly never opens his mouth these days except to criticize the president, supports Trump on tariffs. 

He warns that allowing China's massive stealing to continue will cause "long-term real damage to America."
Actually, as Navarro documents, China has already done an incredible amount of damage to America.
Is there still time to stop the criminal enterprise that is China, Inc., from stealing its way to the top?
Only time will tell. 

Trump's Mongolism Syndrome

Trump railed against China while campaigning. Now he’s gone soft.
By Chuck Schumer

Since his inauguration, Trump has backed off several core campaign positions, including making a stark reversal of his posture toward China. 

He has explained that rather than pursue a tough-on-China trade policy, he will capitulate on U.S. trade interests to win Beijing’s cooperation on North Korea. 

Taking a softer tack on China is misguided: It will hurt hundreds of thousands of U.S. workers and businesses, without changing Beijing’s behavior. 

The best and the only way to achieve results with China is to be strong and consistent about our priorities — on economic issues and national-security issues — rather than the reverse.
Bolstering our economy and creating good-paying jobs is one of the most important goals a president can pursue, especially given middle-class stagnation and discontent. 

Failing to address China’s unfair advantage on trade will mean hundreds of thousands of American workers and businesses must continue to compete on a skewed playing field. 

By dumping counterfeit and artificially cheap goods into our markets, denying the most productive U.S. companies fair access to its markets and relentlessly stealing the intellectual property of U.S. companies, China has robbed the U.S. economy of trillions of dollars and caused the loss of millions of U.S. jobs. 

Estimates by our government pin the cost of cyberespionage alone at $400 billion a year to the U.S. economy, 90 percent of which comes from China’s government. 

Retired Gen. Keith Alexander, the former director of the National Security Agency, has called the loss of industrial information and intellectual property through cybertheft “the greatest transfer of wealth in history.” 

The American worker can ill afford another soft-on-China presidency.
Under Xi Jinping, Beijing will continue to act in its self-interest unless the United States does something to alter the status quo. 

And yet, despite numerous promises during the campaign to crack down on these unfair practices by China, Trump has failed to take any significant action after almost five months in office. 

In fact, he has made trade threats against U.S. allies such as Canada and South Korea while giving China a pass.
The reason? 

Trump believes that obliging China on trade will win its cooperation in handling North Korea. 

He’s gone so far as to promise even more favorable trade terms if China can “solve the North Korea problem.” 

This approach deeply misreads China’s motivations, and Trump seems to have just realized it. 

He recently tweeted: “While I greatly appreciate the efforts of President Xi & China to help with North Korea, it has not worked out. At least I know China tried!” 

We will wait to see if this tweet actually signals a shift in U.S. policy, but no doubt it is a confession that the president’s conciliatory approach toward China has failed.
The president should have known from the very beginning.
Several decades of history have shown that accommodating China on trade will not yield greater collaboration in foreign policy. 

In this area, China has acted as it has on economic policy — it looks out for its own interests and does not shift course unless compelled to. 

So long as China can get away with engaging in the smallest amount of cooperation with the United States abroad while protecting its core economic interests, it will do so, especially if the United States gives away a major bargaining chip — trade — for free.
Trump seems to have done exactly that, accepting China’s bare-minimum concessions in exchange for putting U.S. trade and economic interests on the back burner. 

It is a lose-lose for the United States.
China has its own interests in a denuclearized Korean Peninsula. 

It wants to maintain a divided Korea, with North Korea as a buffer state. 

Concerned about the prospect of increased U.S. pressure, it has taken a few small steps in recent months to curb North Korea’s aggression. 

But China would prefer to contain the problem, not solve it.
To get China to actually bear down on its ally North Korea, the United States must have some leverage in dealing with Beijing. 

Because China’s government cares most about economic growth, trade and dominance in the region, our best bet is to be tough on trade and straightforward about our own national security interests in the region.
In truth, no one has a perfect solution to dealing with North Korea. 

But what absolutely doesn’t make sense is a Trump strategy that undermines South Korea and sells out American workers in the vague hope that China will start cooperating with the United States out of its good graces.
Rather than retreating from his position on trade, Trump should start consistently enforcing trade laws. 

Rather than retreating from our ally South Korea, Trump should strengthen ties. 

He ought to focus less on flattery and charm and heed President Teddy Roosevelt’s admonition to “speak softly and carry a big stick.” 

That’s the best way to help American workers and businesses. 

It’s the best way to get China to cooperate on North Korea, too.