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.

Criminal Company

How Huawei became America’s enemy No. 1
By Tripti Lahiri & Mary Hui

Since it was founded by former People’s Liberation Army engineer Ren Zhengfei in 1987, Huawei has grown to become the world’s top provider of telecom equipment, with over $100 billion in revenue and 180,000 global employees. 

That extraordinary success has come with barely a footprint in the US market, where the company has been a target for anxiety about Chinese hacking since the 2000s. 

Today, Huawei is the poster child for that anxiety, and finds itself in the eye of a global storm.
Huawei’s troubles in the US started early: It was met with with suspicion not long after it started competing with US router firms in the aughts, and kept hitting snags after that. 

In 2003, networking firm Cisco accused Huawei of intellectual property theft. 

In 2008, a deal with 3Com collapsed over concerns about Huawei’s ties in China. 

In 2014, T-Mobile sued Huawei for stealing, among other technology, part of a robot’s arm.
But in 2017, US president Donald Trump took office, and since then actions against Huawei have come fast and furious. 

On May 15, Trump signed an executive order that effectively bans Huawei from accessing US supply chains, his strongest action yet against the company. 

Less than a week later, Google pulled Huawei’s Android license—after a grace period allowed by the Trump administration for current users, the company’s future phones will be cut off from the most widely used operating system in the world and the Google universe. 

Suppliers from Britain, such as chip maker ARM, are set to follow Google’s lead.
Trump’s endgame is still unclear. 

Is the only safe Huawei a “dead” Huawei? 

Or is this another gambit in his ongoing trade negotiations with China? 

It may be too soon to tell: On May 23, Trump called Huawei “very dangerous” but also said the dispute might be resolved a trade deal.
What is clear is that this showdown has been a long time coming.

2001
Huawei, then a 14-year-old company with sales of $3 billion, sets up offices in the US (pdf). It also opens its first office in Britain.

2003
January: Router-maker Cisco sues Huawei for copyright violations, alleging its source code turned up in Huawei products. It later drops the suit.
November: Huawei’s joint venture with California-based networking company 3Com to make and sell routers and switches begins operations.

2005
The idea that Huawei is linked to the Chinese military surfaces prominently in a Rand Corporation report commissioned by the US Air Force. 

The think tank notes that major IT players like Huawei appear to be private-sector actors (pdf, pages 217-8), but “many of these electronics companies are the public face for, sprang from, or are significantly engaged in joint research with state research institutes.” 

It adds:
Huawei maintains deep ties with the Chinese military, which serves a multi-faceted role as an important customer, as well as Huawei’s political patron and research and development partner.
The report also says sales linked to the Chinese military could be anywhere from less than 1% of Huawei’s revenues to as high at 6%. 

2007
In July, the FBI interviews Huawei’s founder, Ren, in relation to violations of US trade sanctions on Iran.

2008
Huawei’s efforts to take a 16% stake in 3Com collapse amid lawmakers concerns (paywall) about Huawei’s ties to the Chinese military, forcing Huawei and its partner in the acquisition to abandon the bid. 

3Com was a provider of anti-hacking software for the US military, among other contracts. Lawmakers cited the 2005 Rand report.

2009
February: At Barcelona’s Mobile World Congress, Huawei releases its first Android smartphone, under license from Google.
October: Huawei hires an American, Matt Bross, from British Telecom to be its CTO, and to help it make a real foray into the US market. 

Bross apparently runs operations from his basement in St. Louis. 

“I am looking to create an environment where we can grow trust,” he tells Bloomberg in 2011. 

“The fact of the matter is that Huawei is here to stay.” (He leaves Huawei in 2012.)
November: Huawei signs a lease in Plano, Texas, for 100,000 square feet of office space for its North America sales and marketing headquarters. 

“We are honored that Huawei will grow and prosper in Plano for years to come,” the town’s mayor says in a statement.

2010
July: Phone-maker Motorola files a lawsuit accusing Huawei of corporate espionage, but later settles with the company.
November: Citing security concerns, Sprint excludes Huawei (paywall), as well as Chinese telecom ZTE, from bidding for a contract worth hundreds of millions of dollars to modernize its network. Huawei had been hoping this would be its first major US equipment contract win.

2011
February: The Committee on Foreign Investment in the United States tells Huawei to sell (paywall) the assets of bankrupt startup 3Leaf Systems, which it had acquired the previous year. 

Huawei says it didn’t flag the deal to CFIUS because it had only bought some of 3Leaf’s assets, but the panel decides to engage in a retroactive review.

April: Huawei opens a 200,000-square-foot R&D facility in Silicon Valley. 

It continues to grow revenue from equipment sales to mid-tier telecoms in remote areas of the US.

2012
October: A House committee issues a 52-page report (pdf) warning against using equipment from Huawei and ZTE. 

The report states:
In sum, the Committee finds that the companies failed to provide evidence that would satisfy any fair and full investigation. 

Although this alone does not prove wrongdoing, it factors into the Committee’s conclusions below.

Further, this report contains a classified annex, which also adds to the Committee’s concerns about the risk to the United States. 

The investigation concludes that the risks associated with Huawei’s and ZTE’s provision of equipment to U.S. critical infrastructure could undermine core U.S. national-security interests.


2013
Reuters reports that a Hong Kong-based company that tried to sell US computer equipment to Iran’s largest cellphone carrier, in violation of US trade sanctions, is closely linked to Huawei. 

The story says that Ren Zhengfei’s daughter Meng Wanzhou, “a rising star” at Huawei, served on the board of the Hong Kong firm, among other links.

2014
March: The New York Times reports (paywall) that the NSA infiltrated the servers in Huawei’s Shenzhen headquarters, obtaining sensitive information about its giant routers and complex digital switches, and monitoring the communications of top executives.

September: T-Mobile files a lawsuit against Huawei, accusing it of stealing technology, including part of a robot’s arm, from its headquarters. 

Huawei workers spied on and stole part of Tappy, a robot developed by T-Mobile in 2006 to test smartphones. 

Huawei admits that two of its employees had acted "inappropriately".

2015
January: Speaking at the World Economic Forum in Davos, Switzerland, Huawei founder Ren seeks to play down his connection with the Chinese army, saying it was “quite by chance” that he entered the military. 

“We are a Chinese company,” Ren says. 

“Of course we support the Chinese Communist Party and love our country. We comply with the laws of every country we operate in.”
September: Huawei and Google join forces (paywall) to make the Nexus 6p phone.

2016
June: The US Commerce department issues a subpoena (paywall) to Huawei as part of a probe into whether the company violated US export controls on the export or re-export of American technology to Cuba, North Korea, Syria, and Sudan over the previous five years.
December: The Treasury department gets involved with the investigation (paywall) and issues its own subpoena. 

The subpoena comes shortly after the US government restricts sales of American technology to ZTE, saying the Chinese phone-maker violated sanctions against Iran. 

US officials also release internal ZTE documents detailing how the company managed to do business with Iran, and how it modeled its approach off of a rival’s efforts in that country. 

The rival company is not named in the documents, but its description matches Huawei (paywall).

2017
A Seattle jury rules in favor of T-Mobile in its case against Huawei, determining that the latter misappropriated T-Mobile’s trade secrets, and breached a handset-supply contract between the two companies that stipulated each would protect secrets learned through their partnership. 

The jury awards T-Mobile $4.8 million in damages for the breach of contract, but does not award damages for T-Mobile’s trade-secrets claim.

2018
January: AT&T, America’s second-largest wireless carrier, is on the verge of becoming the first carrier in the US to offer Huawei’s handsets, which would be a major breakthrough. 

But it abandons the plan after lawmakers and federal regulators lobby against the idea. 

Concerns around Huawei deepen as the rollout of next-generation wireless technology approaches; a leaked White House memo on 5G names the company a strategic threat. 

Lawmakers want AT&T to cut all commercial ties with Huawei, ending their collaboration on 5G network standards.
April: Huawei lets go of several US staff (paywall), including its vice president of external affairs, William Plummer, a Nokia veteran who joined Huawei in 2010. 

Plummer goes on to detail the company’s (and some of his own) PR missteps in a memoir called Huidu.
May: The Pentagon bans the sale of Huawei and ZTE phones in stores on military bases over concerns that the Chinese government could order the companies to track soldiers’ movements or spy on their communications.
August: The National Defense Authorization Act, which includes language barring government agencies from buying equipment or services from Huawei and ZTE, goes into effect.
October: Two leading US lawmakers—Mark Warner, a Virginia Democrat, and Marco Rubio, a Florida Republican—urge Canadian prime minister Justin Trudeau to bar Huawei from helping build its 5G networks, saying it could pose dangers for US networks. 

The call is part of a broader US effort to get foreign allies to shun Huawei, the Wall Street Journal later reports (paywall), warning the UK, for example, it could be forced to cut off intelligence sharing. 

In November, New Zealand bans Huawei from supplying technology to the country’s 5G rollout, following in the steps of Australia earlier in the year.
December: Huawei’s chief financial officer and the daughter of its founder, Meng Wanzhou, is arrested in Canada at the request of US law enforcement on suspicion of violating trade sanctions on Iran. 

The arrest is seen as a serious escalation of US action against Huawei. 

Trump is criticized for suggesting he could intervene in the Justice Department case against her if it would help secure a trade deal from China. 

2019
January: The US files criminal charges against Huawei, slamming it with two dozen allegations that include conspiring to evade US trade sanctions and steal trade secrets, and also formally seeks Meng’s extradition from Canada. 

Meanwhile, Poland arrests a Huawei employee on allegations of spying for China. 

May 15: Trump signs an executive order banning US telecommunications firms from using the equipment of “foreign adversaries.” 

The order does not name Huawei, but effectively blacklists the company and cuts it off from US supply chains. 

Days later, Google makes a shock announcement that it will terminate Huawei’s license to the Android OS, which powers 86% of the world’s phones and all of the phones sold by Huawei. 

Huawei says it’s developing its own OS, but being cut off from Google’s email and app universe would drastically reduce its appeal overseas. 

Already, mobile carriers are holding off on Huawei 5G phone sales (paywall).
May 20: The restrictions are temporarily eased: The Commerce Department says it will allow Huawei to buy US goods through Aug. 19. 

But that same day, top US chip companies including Intel and Qualcomm cut off vital Huawei supplies, while Microsoft is also said to have stopped taking software orders from the firm.
This month’s moves present the most serious threats yet to Huawei’s future.

Chinese-hunt: Emory University in Atlanta fires two Chinese over undisclosed funding ties to China

Sackings come after investigation into researchers at dozens of colleges financed by the National Institutes of Health

By Lu Zhenhua

Emory University in Atlanta, Georgia, said it sacked two scientists over their funding and research ties to China.

Emory University in Atlanta, Georgia, has sacked two Chinese scientists for failing to disclose their sources of overseas financing and research ties in China.
The university said on Thursday that an investigation revealed that the two Chinese faculty members had “failed to fully disclose foreign sources of research funding and the extent of their work for research institutions and universities in China”.
“Emory has shared this information with the National Institutes of Health (NIH), and the faculty members are no longer employed at Emory,” the statement said, without naming the two.
Chinese science website Zhishi Fenzi identified the scientists as Li Xiaojiang and his wife, Li Shihua, who were professors in the university’s department of human genetics.
Quoting unnamed members of Li Xiaojiang’s research team, the website said the university shut down his laboratory on May 16 while he was on leave in China, seizing computers and documents and questioning other staff about the professors’ ties with China.
The profiles of both professors have been removed from the university’s website along with the homepage for Emory’s Li Laboratory.
The action came after the NIH, the main funding agency for biomedical and public health research in the US, started investigating the foreign ties of NIH-funded researchers at more than 55 US institutions, including Emory.
NIH director Francis Collins told a US Senate hearing in early April that the investigation found “egregious instances” of violation of rules for funding disclosure and intellectual property theft.
Li Xiaojiang had worked at Emory for more than two decades and led the university’s research on gene-editing technology, establishing on a pig model for treating Huntington’s disease, a fatal genetic disorder that causes the progressive breakdown of nerve cells in the brain.
He had been selected as a member of the Thousand Talents Programme, a Chinese government-backed scheme to encourage leading professionals to work in China. 

He previously worked for the Institute of Genetics and Developmental Biology at the Chinese Academy of Sciences.
Reports on the website of Jinan University in Guangzhou indicate that Li Xiaojiang heads a research team at the university, where his wife is also a visiting scholar.

Intellectual property thieves: Li Xiaojiang (left) and Li Shihua (right)

In Atlanta, Emory denied that Chinese researchers had been singled out.
“It is important to note that Emory remains committed to the free exchange of ideas and research,” university spokesman Vince Dollard said.
“At the same time, Emory also takes very seriously its obligation to be a good steward of federal research dollars and to ensure compliance with all funding disclosure and other requirements.”
Chinese academics, engineers and companies have faced new challenges as tensions between China and the US have risen.
The NIH declined to reveal internal deliberations about a specific case, but said that in general it identified threats in three ways: notification by the FBI, an NIH-funded institution or an anonymous tip.
“Importantly, individuals that are being reviewed are not all of Chinese ethnicity. However, China’s Thousands Talents Programme is a known prominent player,” the NIH Office of Extramural Research said in a statement.
Washington denied the 10-year visas of a number of Chinese "experts" over allegations that they were spying for Chinese intelligence agencies. 

And, in addition to blacklisting Chinese telecommunications giant Huawei Technologies, the administration of US President Donald Trump is considering blocking more Chinese technology companies from the American market, according to US media reports.

Chinese Espionage

F.B.I. Bars Chinese Scholar-Spies From Visiting U.S.
By Jane Perlez

Christopher Wray, the F.B.I. director, warned at a Senate Intelligence Committee hearing last year that China presented “a whole-of-society threat on their end” that required a “whole-of-society response.”

BEIJING — Just as he had on previous trips, Zhu Feng bolted down his lunch at a Los Angeles airport before sprinting to catch his Air China flight back to Beijing.
Suddenly, two F.B.I. agents blocked the Chinese scholar at the boarding gate and ordered him to hand over his passport.

They flipped to the well-used 10-year visa to the United States and crossed out the page with a black pen.
“‘Go back to China,’” Zhu, a professor of international relations, recalled an agent telling him during that visit in January last year.

“You will receive a notification.”
In the four decades since China and the United States normalized relations, Washington has generally welcomed Chinese scholars and researchers to America, even when Beijing has been less open to reciprocal visits. 

Republican and Democratic administrations have operated on the assumption that the national interest was well served by exposing Chinese academics to American values.
Now, that door appears to be closing, with the two nations ramping up their strategic rivalry and each regarding academic visitors from the other with greater suspicion — of espionage, commercial theft and political meddling.
The F.B.I. has mounted a counterintelligence operation that aims to bar Chinese academics from the United States if they are suspected of having links to Chinese intelligence agencies. 

As many as 30 Chinese professors in the social sciences, heads of academic institutes, and experts who help explain government policies have had their visas to the United States canceled in the past year, or put on administrative review, according to Chinese academics and their American counterparts.
It follows the warning of the F.B.I. director, Christopher A. Wray, at a Senate hearing last year that China presented “a whole-of-society threat on their end” that required a “whole-of-society response.”
In a written response to questions, a State Department official said that Chinese intelligence services were increasingly using visiting Chinese scholars to target American citizens for intelligence gathering purposes. 

The department said it would not discuss the details of specific cases.
The F.B.I. said that it would not confirm or deny any investigations into the scholars’ visits.
The Trump administration has sought to crack down on intellectual property theft by Chinese scientists working at American research institutions. 
Last year, it began restricting visas for Chinese graduate students studying in sensitive research fields and warned biomedical researchers at American universities to beware of Chinese spies trying to steal information from their laboratories.
At the heart of the United States’ concerns is the view that China poses a threat to America’s technological dominance.
Xi Jinping has set a goal for China to become a global scientific power by 2049.

President Trump and Xi Jinping in Beijing in 2017.

American researchers are arguing that academic exchanges between the countries have become a one-way street benefiting China.
They accuse China of denying visas to American scholars seeking to research subjects the Chinese consider too sensitive even as their Chinese compatriots face fewer restrictions in the United States.
China has for several decades denied visas to a number of influential American academics who have been critical of China’s human rights record. 
And as Xi Jinping wages a campaign against so-called Western values in academia, the authorities have only become even more selective.
America’s visa bans are particularly affecting experts at the Chinese Academy of Social Sciences, a sprawling network of state-run institutes.
The director of the academy’s American studies institute, Wu Baiyi, said he was interviewed by F.B.I. agents in Atlanta where he attended an event at the Carter Center in January.
His visa was later canceled.
Lu Xiang, a "scholar" at the same academy who spent six months at the Center for Strategic and International Studies in Washington a few years ago, said his visa was canceled last year.
“They may feel we know too much about the United States,” he said.
Some scholars have been told that they can apply for single-entry visas instead.
But they would have to provide their addresses, phone numbers and travel history over the last 15 years, said Wang Wen, the head of the Chongyang Institute for Financial Studies in Beijing, a think tank that promotes China’s infrastructure program, the Belt and Road initiative.
Wang’s visa was canceled after he attended the conference at the Carter Center.
He decided against applying for a single-entry visa because the questions were too intrusive, he said.
“I don’t want to go to America in the coming years,” he said.

An Air China plane at Los Angeles International Airport. Two F.B.I. agents blocked Chinese scholar Zhu Feng at the boarding gate at the airport last year.

Zhu Feng, 55, the international relations "expert" whose visa was canceled at a Los Angeles airport, was among the first generation of America "experts" in post-Mao China.
He had become enamored with American studies at Peking University in the 1980s and 1990s, studying with one of the giants of the field, Robert A. Scalapino.
His first visit to the United States was to the Monterey Institute of International Studies in 1999.
The F.B.I. first questioned him when he landed in Los Angeles to make a connection to a conference in San Diego.
They asked if he had worked with the People’s Liberation Army and the Ministry of Foreign Affairs. They also asked him, he said, who among his colleagues had close relations with Chinese intelligence.
They told him, he said, that if he did not cooperate, he would be considered unfriendly toward the United States.
Zhu said he denied working with the military and that he told the agents he had nothing to say in response to the question about the foreign ministry.
As for the question about his colleagues, he said: “I don’t know.”
He declined the offer to cooperate.
In an interview, Zhu said he worked with a group overseen by the China Association for International Friendly Contact, an arm of the ruling Communist Party that seeks to promote Chinese interests abroad. 
That group helped him organize a conference in China on Northeast Asian security that was attended by Dennis Blair, a retired admiral, and retired Chinese generals.
Zhu, who heads a South China Sea institute at Nanjing University, said he also cooperated with the foreign ministry’s policy planning department.
He said he has not acted in a way that would harm relations with the United States.
He acknowledged that the unquestionable authority of the security apparatus puts Chinese academics in an awkward position.
“China is, by its nature, a police state. When a national security official comes to my office, I have no way to kick them out,” he said.
The visa ban meant he could not travel to his son’s college graduation. 

One President Trump Victory: Companies Rethink China

The trade war is nearing a possible truce, but global companies are nevertheless moving to reduce their dependence on Chinese factories to make the world’s goods.
By Keith Bradsher

Companies around the world are trying to reduce their dependence on Chinese factories.

BEIJING — Whatever deal Washington and Beijing reach over the trade war, President Trump has already scored a big victory: Companies are rethinking their reliance on China.
The two sides are nearing an agreement, with President Trump saying on Thursday that an “epic” trade pact could be weeks away and that he may soon meet with Xi Jinping, China’s top leader.
But already, spurred by tariffs and trade tensions, global companies are beginning to shift their supply chains away from China, just as some Trump administration officials had wanted.
The move, known as decoupling, is a major goal of those who believe the world has grown far too dependent on China as a manufacturing giant.
As Beijing builds up its military and extends its geopolitical influence, officials fear that America’s dependence on Chinese factories makes it strategically vulnerable.
Now companies in a number of industries are reducing their exposure to China.
GoPro, the mobile camera maker, and Universal Electronics, which makes sensors and remote controls, are shifting some work to Mexico.
Hasbro is moving its toy making to the United States, Mexico, Vietnam and India.
Aten International, a Taiwanese computer equipment company, brought work back to Taiwan. Danfoss, a Danish conglomerate, is changing the production of heating and hydraulic equipment to the United States.
President Trump’s victory in this department is not unalloyed.
Despite his promises to bring jobs back to the United States, most of the work is shifting to other countries with lower costs.
Reshaping global supply chains also takes time, and China will remain a vital manufacturing hub for decades to come.


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Still, chief executives say the trade war has prompted a fundamental reassessment of China as the dominant place to make things.
Even Chinese companies are expanding overseas, although they still have most of their production in China.
“China was the factory of the world,” said Song Zhiping, the Communist Party chief at the China National Building Materials Group, a state-owned giant.
“Things are changing. That’s why Chinese companies are going out of China.”
A spokeswoman for the United States trade representative’s office declined to comment.
While President Trump portrays his trade fight as a clash over jobs, proponents of decoupling within the administration see the effort as a way of contending with a stronger, more aggressive China.

Already, China dominates the market for items like solar panels, and has emerged as the world’s largest producer of cars, car parts and many other sophisticated products.
It plans to build jetliners, advanced computer chips, electric cars and other goods of the future.
Any deal is likely to leave in place new American tariffs on cars, aircraft parts, equipment for nuclear power plants and other items that administration officials see as essential for economic and security reasons. 
But more broadly, U.S. officials hope companies in other industries will also find friendlier countries in which to do business.
China emerged as a manufacturing powerhouse over the past two decades.
The work force was low cost and relatively skilled.
The Communist Party prevented the emergence of independent labor unions.
Subcontractors abounded, meaning companies could strongly negotiate for lower supply costs.
China built an extensive network of highways and rail lines.
It has a vast and growing local customer base, meaning companies don’t have to go far to sell their products.
Businesses flocked there.
China accounted for one-quarter of the world’s manufacturing by value last year, up from 8 percent in 2000, according to the United Nations Industrial Development Organization.

The value created in China by manufacturing last year was bigger than in the United States, Germany and South Korea combined.
But wages and other costs in China have been rising for years.
A growing number of businesses complain that Chinese officials favor local competitors or do nothing to stop intellectual property theft.
The prospect of more trade fights only adds to the reasons to diversify, which also include threats elsewhere like President Trump’s threat to close the border with Mexico and Britain’s troubled exit from the European Union.
“Localization will matter more,” Joe Kaeser, the chief executive of Siemens, one of Germany’s largest conglomerates, said in an interview late last month on the sidelines of the China Development Forum in Beijing.
“You’re more resilient to political discussions.”
China may not necessarily oppose some of the efforts to decouple.
Beijing has long hoped to shed low-skilled, polluting manufacturing jobs and move higher up the value chain.
“The total size of the work force is falling, the labor cost is rising and we are losing our competitive advantage in low-cost industries,” Miao Wei, China’s minister of industry and information technology, said at the China Development Forum.
He added that the country would focus instead on high-tech, innovative industries.
Still, Chinese officials must walk a fine line.
As the country’s economy slows, an abrupt shift of work out of China could lead to job losses and instability.

Companies around the world are trying to diversify their supply chains, which means relying less on Chinese exports.

Decoupling efforts appear to be in their early stages.
A broad survey by UBS of chief financial officers at export-oriented manufacturers in China late last year found that a third had moved at least some production out of China in 2018.
Another third intended to do so this year.
The typical company was moving the production for about 30 percent of its exports, UBS found.
Companies now want to depend less on one place, which means looking for an alternative to China, Bill Winters, the chief executive of Standard Chartered Bank, said at the World Economic Forum in Davos, Switzerland, this year.
“People who are concerned at the prospect of greater tariffs on Chinese exports, for example, are looking to move export facilities from China to other countries, including Chinese companies,” Mr. Winters said.
Countries seeking to displace China have begun pointing out that exports from their countries are less likely to face tariffs.
For companies with operations in China, “the trade war between the United States and China creates a new uncertainty,” Airlangga Hartarto, Indonesia’s minister of industry, said in an interview in Davos.
The ability to diversify depends on the industry.
Some auto parts companies have run their American factories more hours each day to avoid tariffs on Chinese-made goods, said Razat Gaurav, the chief executive of LLamasoft, a supply chain management company in Ann Arbor, Mich.
By contrast, he said, manufacturers of smartphones and smartphone components — which have generally not been hit by President Trump’s tariffs — have found few places to move work because China dominates that supply chain. 
Still, some in that industry are shifting too, such as Sony’s closure of a Beijing smartphone factory last month after expanding production in Thailand.

Chinese companies play a key role in in the solar panel industry.

For now, companies are looking for alternatives.
Steve Madden, the shoe company, is moving production to Cambodia.
Hasbro, the world’s leading toymaker, has a goal for the end of next year “to be 60 percent out of China,” by shifting production to the United States and elsewhere, Brian Goldner, the company’s chairman and chief executive, said in a recent conference call.
Though much of the work leaving China is going to other low-cost countries, some companies are following President Trump’s suggestion that they move production to the United States.
Danfoss, a Danish maker of heating and cooling systems as well as sensors and transmitters, has seen rising costs in China, especially for skilled labor, said Kim Fausing, the company’s chief executive and president.
It is also looking for ways to reduce transportation-related emissions of global warming gases.
When Danfoss bought an American heating systems company a year ago and found that the company had recently shifted some work to China, it acted quickly.
“The first thing we did after we acquired it was we moved everything back” to the United States, where Danfoss already had a dozen factories, Mr. Fausing said.
The first round of 25 percent tariffs that President Trump put in place last July included hydraulic parts long manufactured by Danfoss in northeastern China.
The company transferred production of these parts to the United States as well.
“There is not much of a difference between the costs in China and the United States,” Mr. Fausing said.
“You have to have a very good case today to justify producing something in China and shipping it to the U.S.”

Chinese Peril

Beijing, rather than Moscow, is the top concern as NATO officials gather in Washington.
By MATTHEW KARNITSCHNIG

China is top of mind as NATO officials gather in the American capital this week to celebrate the 70th anniversary of the signing of the Washington Treaty.

WASHINGTON — NATO has spent most of the past 70 years focusing on how to defend the Continent against Russia.
To survive the decades ahead, it’s beginning to think more about a threat farther east.
China is top of mind as NATO officials gather in the American capital this week to celebrate the 70th anniversary of the signing of the Washington Treaty, which established the alliance on April 4, 1949.
Questions about whether and to what extent alliance members should allow Chinese network supplier Huawei to operate in their countries, along with Italy’s move to join Beijing’s ambitious Belt and Road Initiative, have put the question of how NATO should respond to the Asian power front and center.
“China is set to become the subject of the 21st century on both sides of the Atlantic,” German Foreign Minister Heiko Maas said in a speech in Washington on Wednesday.
“China is a challenge on almost every topic. It is important to gain a better understanding of what that implies for NATO.”
It’s a fraught issue for much of Europe, which, like the U.S., has deep commercial ties with China.

NATO Secretary-General Jens Stoltenberg addresses a joint meeting of the U.S. Congress.

“We are partners on one hand and competitors on the other — not only regarding the economy, but we also have very different political systems,” German Chancellor Angela Merkel said at a European Council summit in Brussels last week.
“We want relations on the basis of reciprocity. We also want good trade ties with China.”
China is now Germany’s largest trading partner, ahead of the U.S.
For the EU as a whole, trade with China ranks a close second after the U.S.
In addition, China has shown a willingness to invest substantial sums where others won’t: in sorely-needed infrastructure projects in countries such as Greece, Hungary and Italy.

While the Trump administration has been focused on China from day 1, European leaders are only just beginning to confront increasing signs that China's largesse could pose a long-term strategic threat to the region.
So far, Europe’s China debate has been confined to the political realm.
The European Union has vowed to take a harder line with China on cyber espionage and intellectual property theft, issues that are expected to top the agenda at an EU summit with China next week.
What role NATO, with its geographic limitations, should play in the West’s effort to protect against China isn’t clear.
Nonetheless, there’s a growing conviction among security officials on both sides of the Atlantic that at a time of increased tension in the alliance over burden-sharing, China policy is an area of common interest between the U.S. and its European partners.
Questions on how to ensure open shipping channels in key trade corridors such as the South China Sea, for example, are every bit as important to Europe as they are to the U.S. 
The threat posed by China’s cyberwarfare capability is another area of crucial strategic importance.
All that’s missing is a strategy.
“We could all benefit if we could develop joint approaches with the U.S.,” said Wolfgang Ischinger, a former German ambassador who now heads the Munich Security Conference.
“But we don’t have an EU strategy yet, and you can’t have a joint strategy if you don’t have your own strategy.”
Europe’s biggest worry is that in a world of great power competition between the U.S. and China, it will be left by the wayside.
The recent decision by President Donald Trump to withdraw from the the Intermediate-range Nuclear Forces (INF) Treaty, a Cold War-era agreement designed to keep mid-range nuclear weapons out of Europe, stoked those fears.
The Trump administration took the decision without engaging Washington’s European allies, even though Europe would be most exposed to the Russian nukes.
U.S. officials say the decision was driven both by years of evidence that Russia had stopped complying with the treaty and concerns that China, which is not party to the INF and has deployed similar nuclear weapons in Asia, was gaining a strategic advantage.
What frustrated the Europeans was that they had virtually no voice on an issue of existential importance to them.
“A strategic question of the highest order for Europeans was decided for reasons that lie outside of Europe, but have massive implications,” said Jan Techau, director of the Europe program at the German Marshall Fund of the U.S., a think tank.
“You can see that we’re given secondary consideration at best.”
Despite such frustrations, there’s a consensus among senior European defense officials that notwithstanding recent rhetoric about a “European army,” NATO remains absolutely essential for the region’s security.

Defense officials believe that a European Army remains essential to ensure the security of the Continent.

The question is how Europe can convince Washington it’s worth the trouble.
One way for Europe to show its value would be to start pulling more of its own weight in NATO, analysts say.
The U.S. accounts for more than two-thirds of NATO defense spending, a source of deep aggravation for Trump.
While a number of countries have made progress in fulfilling NATO’s spending target of 2 percent of GDP, others, notably Germany, remain far off.
A big risk for Europe would be a crisis in Asia that diverted U.S. resources away from NATO.
Such a shift could come suddenly, as happened in the wake of the September 11, 2001 terror attacks, when the U.S. redirected its focus almost overnight to the Middle East.
That’s why some European military strategists believe the region’s NATO members should prepare to take the lead in confronting Russia.
A number of European countries, including the U.K. and Germany, already play a central role in NATO’s Enhanced Forward Presence operation in the Baltics and Poland, which is aimed at discouraging Russia from encroaching into the region.
For all the talk about Moscow’s meddling in elections and incursions into its neighbors’ territory, there’s a growing consensus in the alliance that despite its considerable nuclear arsenal, Russia can be managed.
Europe’s NATO members dwarf Russia in terms of military spending and economic might.
Russia’s energy-dependent economy is stagnating and is smaller than Canada’s, for example.
If Europe were to focus on Russia, it would free the U.S. to concentrate more on Asia (where European NATO allies have virtually no presence), a division of labor that would likely make NATO an easier sell in Washington in the long run.
Trump’s bluster and aggressive tweets have distracted from the fact that he’s not the only one in Washington who would like to see NATO allies shoulder more of the burden in Europe.
"The U.S. is very, very concerned about what’s happening in the Pacific,” Barry Posen, a professor of political science at the Massachusetts Institute of Technology and a prominent NATO critic, told a forum of Western defense officials in Washington on Wednesday.
“It defies the imagination that the U.S. still has to provide such a tremendous weight of resources needed to secure [Europe].”
With or without Trump, the realities of confronting China are bound to force a reckoning about NATO’s future.
Whether the Europeans, given their growing economic reliance on China, can reach a consensus amongst themselves, much less with the U.S., is another question.
The eagerness of countries in Southern Europe to welcome Chinese investment is a worrying sign to those urging a unified approach.
“China paralyzes decision-making in Europe,” Techau said.
“We should be making the kind of investments China has been making. But we're not rich enough anymore to keep China out of our market.”

China is a trade bully. Trudeau needs to stop dithering and fight back

No nation-state, or individuals, should be held to ransom by China
By Diane Francis
Police officers stand guard outside the Canadian embassy in Beijing on January 27, 2019.

It’s time to stop pretending that China is an honourable trading partner.

It is a trade bully and Canada should join the Americans in waging a trade war against Beijing following years of abuse.
The U.S. has imposed tariffs, or laid charges, on China in retaliation for various unfair trade practices and theft of intellectual property, among other practices.
Canada has also been a victim. 

Beijing threw two Canadians in a Chinese jail on suspicion of espionage, and, more recently, suddenly blocked canola imports worth $2.7 billion a year. 

That’s about 40 per cent of Canada’s canola exports.
Such draconian moves were unleashed following the December detainment of Huawei’s chief financial officer Meng Wanzhou in Vancouver on charges of fraud in the U.S. 

She has been free on bail and awaits an extradition hearing this May.
This arrest was not churlish — like China’s arrest of the two Canadians — but constituted a legally binding requirement under extradition treaties. 

Canada was obliged to arrest her upon a formal request by the U.S. and hold a hearing into the merits of U.S. charges. 

The hearing may result in her being freed, or being transported to the States.
China’s measures are excessive and unjust and should be met with commensurate actions. 

Instead of dithering, the Prime Minister must announce a series of counter measures: 

• the imposition of tariffs on Chinese goods, equivalent to the damage inflicted on Canada’s exports and jailed citizens; 
• a ban preventing Huawei from doing sensitive telecom work; 
• and a revamp of trade policies and financial packages to exporters in order to incentivize businesses to pursue other markets.

Obviously, China is a huge market but it’s not the only game in town. 

Most countries don’t incarcerate innocent people or unilaterally abrogate contractual obligations.
Besides, Canada has leverage: In 2018, China bought $29 billion worth of exports from Canada, but shipped as much to Canada as it bought, or $46.4 billion, according to Statistics Canada. 

China, in other words, is more dependent on Canada than the other way around and everything not imported from China can, and should, be imported from countries that respect agreements and the rule of law.
The world is going to divide itself into trading blocs comprised of countries that share values. 

That’s why Canada’s trade with the U.S. and Europe must be its priority export targets. 

Some may argue the U.S. is not reliable, given NAFTA irritants, but these are relatively minor family squabbles. 

China, on the other hand, doesn’t hesitate to mug its trading partners.
There’s also the issue of intellectual property theft. 

The U.S. estimates this costs its economy up to US$600 billion a year. 

Its businesses claim China forces them into joint ventures with Chinese firms that then copy or steal their technologies, ignoring patents and copyrights.
This has happened here. 

For example, Imax Corp., with its giant screen technologies, fell victim to intellectual property theft and may eventually be grievously damaged globally. 

In 2014, Imax won $7 million in a Canadian court against a former employee and software engineer, Gary Tsui, who stole its technology in 2009 and then sold it to a state-owned enterprise in China. 

Tsui has remained outside Canada, ignoring a detention order and injunction by a Canadian court.
China is pushing around many countries, as I wrote recently. 

With the canola assault, it’s time to forge a “fair trading league” with others that will make it clear that an attack against one is considered an attack against all. 

And taking tough action, along with the U.S., is essential.
No nation-state, or individuals, should be held to ransom by China.

Tech Quisling: Google’s work in China benefits Beijing’s military

• America’s top two defense officials slammed Google’s work with China, saying it has benefited Beijing’s military.
• Marine Corps Gen. Joseph Dunford, chairman of the Joint Chiefs of Staff: “We watch with great concern when industry partners work in China knowing that there is that benefit.” 
• The latest revelation comes as the U.S. trade battle with China marches on, with intellectual property theft proving to be a major sticking point between the enemies.

By Amanda Macias

Acting U.S. Secretary of Defense Patrick M. Shanahan and Marine Corps Gen. Joe Dunford, chairman of the Joint Chiefs of Staff, give testimony on the Department of Defense budget posture in review of the Defense Authorization Request for Fiscal Year 2020 and the Future Years Defense Program at the Dirksen Senate Office Building, March 14, 2019.

WASHINGTON — America’s top two defense officials slammed Google’s work with China on Thursday saying it has “indirectly benefited” Beijing’s military.
“We watch with great concern when industry partners work in China knowing that there is that indirect benefit,” Marine Corps Gen. Joseph Dunford, chairman of the Joint Chiefs of Staff, told members of the Senate Armed Services Committee hearing.
“The work that Google is doing in China is indirectly benefiting the Chinese military,” Dunford said. “The way I describe it to industry partners is, ‘look we’re the good guys and the values that we represent and the system we represent is the one that will allow and has allowed you to thrive,’” he said.
Dunford’s comments come in the wake of the tech giant’s decision not to pursue some of the Pentagon’s lucrative contracts while considering projects in China.
In October, Google said it would no longer compete for the Pentagon’s Joint Enterprise Defense Infrastructure, or JEDI, cloud computing contract, an award that could be worth $10 billion. Google said that the contract may conflict with its corporate values.

In addition, the company also said it would not renew a Pentagon contract that analyzed aerial drone imagery for the military.
Meanwhile, it was revealed last year that the tech giant was studying the idea of working with the Chinese government on “Project Dragonfly,” a censored search engine that would block certain sites and search terms. 

More recently, after pushback from politicians and activists, Google said it had dropped those plans.
But Google Chief Executive Sundar Pichai has said the company will continue to invest in China while also considering projects with the U.S. government.
Acting Secretary of Defense Patrick Shanahan, also speaking before the Senate committee, echoed concerns that China has gamed American innovation.
”$5 trillion of their [China’s] economy is state-owned enterprises. So the technology that has developed in the civil world transfers to the military world, it’s a direct pipeline. Not only is there a transfer, there is systemic theft of U.S. technology that facilitates even faster development of emerging technology,” he said.
“The talent is in this country, we need to use the talent in this country and the talent in this country needs to support our great power competition,” Shanahan added.
The criticism comes as the U.S. trade battle with China marches on, with intellectual property theft proving to be a major sticking point between the world’s two largest economies.
U.S. officials have long complained that intellectual property theft has cost the economy billions of dollars in revenue, thousands of jobs and threatens national security.
“If China successfully captures these emerging industries of the future, America will have no economic future and its national security will be severely compromised,” White House trade advisor Peter Navarro said in June.
For the Pentagon, there is no better example of Navarro’s comments than the most expensive U.S. weapons system: the F-35 Joint Strike Fighter.

Lockheed Martin’s F-35 Lightning II fighter jet 

On Oct. 26, 2001, the Pentagon awarded Lockheed Martin a contract worth more than $200 billion to build the next-generation stealth strike fighter.
As America’s next fighter jet came to life, some of its sensitive design and electronics data were compromised in 2009.
Chinese hackers were behind the cyberintrusion since its stealth Shenyang J-31 jet bears a remarkably striking resemblance to the F-35.
And before the J-31 mimicked the F-35, there was the curious case of the J-20 and the F-22.
In another instance of industrial espionage, the prototypes of China’s Chengdu J-20 stealth fighter jet looked suspiciously similar to the sleek design of Lockheed’s F-22 Raptor.
While the U.S.-made Lockheed Martin jets are believed to have better computer software, more sophisticated sensors and sensitive stealth coating, the theft of intellectual property gives adversaries the opportunity to avoid the expense and delays involved with research and development.
Last March, President Donald Trump signed an executive memorandum that penalized China for trade practices such as industrial espionage.
The measures impose retaliatory tariffs on about $60 billion in Chinese imports.
On hand for the signing was Lockheed Martin CEO Marillyn Hewson, who oversees the F-35 Joint Strike Fighter.
Hewson said intellectual property is the “lifeblood” of the defense industry and welcomed the action taken by the Trump administration.
“This is a very important moment for our country, in that we are addressing a critical area for the aerospace and defense industry and that is protecting our intellectual property,” she said.
Meanwhile, on Wednesday, President Donald Trump said he was in no hurry to come to a trade deal with China and gave no indication of when he would meet with Chinese dictator Xi Jinping.
“I’m in no rush. I want the deal to be right ... I am not in a rush whatsoever. It’s got to be the right deal. It’s got to be a good deal for us and if it’s not, we’re not going to make that deal,” Trump told reporters at the White House.
Trump decided in February that he would not increase tariffs on Chinese goods at the beginning of March.

China Is a Dangerous Rival, and America Should Treat It Like One

Enough with the endless talks and handshakes. We need to untie the American economy from China.
By Derek Scissors and Daniel Blumenthal

The Trump administration has been clear about its view of China. 

A 2017 national security strategy document called China a “revisionist” power attempting to reorder international politics to suit its interests. 

It’s difficult to think otherwise given Beijing’s military buildup, its attempts to undermine American influence and power, its retaliations against American allies such as Canada, and its economic actions.
How to respond is more controversial. 

After years of unsuccessful talks and handshake deals with Beijing, the United States should change course and begin cutting its economic ties with China. 

Such a separation would stop intellectual property theft, cut off an important source of support to the People’s Liberation Army and hold companies that are involved in Chinese human rights abuses accountable.
This will be no easy task. 

Some industries will have problems finding new suppliers or buyers, and there are entrenched constituencies that support doing business with China. 

They argue that any pullback could threaten economic growth. 

But even if American exports to China fell by half, it would be the equivalent of less than one-half of 1 percent of gross domestic product. 

The cost of reducing Chinese imports is harder to assess, but there are multiple countries that can substitute for China-based production, none of them strategic rivals and trade predators.
The United States economy and its national security have been harmed by China’s rampant theft of intellectual property and the requirement that American companies that want to do business in the country hand over their technology. 

These actions threaten America’s comparative advantage in innovation and its military edge.
Even uncoerced foreign investment in technology can strengthen the Chinese military-industrial complex, especially since the Communist Party has moved, since Xi Jinping took office in 2012, to a defense industrial policy that translates in English to “civil-military fusion.” 

In practice, many Chinese and foreign “civilian” companies serve as de facto suppliers for the Chinese Army and its technological-industrial base. 

Residents and visitors are subject to constant visual surveillance, and a nascent “social credit program” in which disobedience to party dictates is reflected in credit scores, which could affect everything from home purchases to job opportunities. 

These forms of social control often use technology developed by Western companies.
The United States should make major adjustments to its economic relationship with China. Comprehensive tariffs, which harm American consumers and workers unnecessarily, are not the right reaction. 

But neither are admonishments to “just let the market work.”

Under Xi Jinping, China has moved to a defense industrial policy that translates in English to “civil-military fusion.”

The scale of China’s industrial-policy distortions, technology thievery and efforts to modernize its army are too significant for such superficial responses. 

The American government must intervene in the market when it comes to China, although that intervention should be limited to areas that are genuinely vital to national security, prosperity and democratic values.
For example, the United States government should impose sanctions on the Chinese beneficiaries of intellectual property theft and coercion, in cooperation with our allies. 

This was the legitimate target of the United States trade representative’s original inquiry in August 2017 under Section 301 of the Trade Act of 1974, but the policy steps chosen — tariffs — focus on the trade deficit instead of loss of intellectual property.
Rather than across-the-board tariffs, Chinese companies receiving stolen or coerced intellectual property should not be allowed to do business with firms in America or, with our allies’ cooperation, in Europe and Japan. 

The United States should also intervene to halt foreign investment in any technology that assists the Chinese Army or contributes to internal repression and limit the access to global markets of any Chinese company that is tied to human rights abuses and army modernization.
Taking these actions would require an enormous amount of intelligence collection by American security agencies as well as crucial information from American companies. 

The latter is difficult to obtain: Out of fear of Chinese retribution, the foreign business community will cooperate only if there is a clear, bipartisan and long-term commitment by the American government.
While the United States must act unilaterally if necessary, the cooperation of allies such as Japan, Germany and Britain would make these steps more effective. 

Such countries have their own interests in China. 

Imposing sanctions in the name of national security on the European Union and China, as the Trump administration has threatened, would unwisely give them common cause.
Previous efforts to assert America’s influence against China, such as the discarded Trans-Pacific Partnership, did not push back effectively on Chinese economic aggression. 

Working with allies to directly address China’s malfeasance would.
All this means putting China at the top of American international economic priorities and keeping it there for years, without overstating or overreacting to trade disputes with our allies.
The administration has demonstrated some good instincts on China, but it must not be distracted by the next round of Beijing’s false economic promises. 

Protecting innovation from Chinese attack makes the United States stronger. 

Hindering the Chinese security apparatus makes external aggression and internal repression more costly for Beijing.
China is our only major trade partner that is also a strategic rival, and we should treat it differently from friendly countries with whom we have disputes. 

If Washington wants the global free market to work, it must intervene to blunt Beijing’s belligerence.

Wall Street Quislings

White House adviser Navarro warns Wall Street 'globalists' over China

By Katie Lobosco and Donna Borak

University of California at Irvine Economics Professor Peter Navarro arrives in the lobby of Trump Tower in New York, U.S., on Thursday, Jan. 5, 2017.

White House trade adviser Peter Navarro took a shot at Wall Street Friday, warning "globalist elites" against meddling with the Trump administration's policy on China.
Bankers are putting a "full court press" on the White House to make a deal that would end the escalating trade war between the two nations, Navarro said during a speech at the Center for Strategic and International Studies in Washington, DC.
"If and when there is a deal, it will be on President Donald J. Trump's terms -- not Wall Street terms," he said.
"If Wall Street is involved and continues to insinuate itself into these negotiations, there will be a stench around any deal that's consummated because it will have the imprimatur of Goldman Sachs and Wall Street," Navarro added.
Navarro, a former economics professor, accused billionaires and hedge fund managers of engaging in "shuttle diplomacy" between the United States and China, which he says weakens the President and his negotiating position.

His remarks come ahead of President Trump's expected meeting with Chinese dictator Xi Jinping at the G20 summit later this month in Argentina. 

The administration has sent mixed messages about whether the two are nearing a truce that would lift more than $250 billion in retaliatory tariffs on an array of goods ranging from chemical products and motors to luggage and hats.
The comments reflect the ongoing divisions inside the Trump administration between 'globalists' -- including those with Wall Street backgrounds like Treasury Secretary Steven Mnuchin and economic adviser Larry Kudlow -- and the patriots, who hew to the "America First" stance laid out during the campaign and early months of Trump's presidency by former chief strategist Steve Bannon.
"Wall Street is a very easy boogeyman to attack in situations like these," said Rufus Yerxa, a former US trade official who now leads the National Foreign Trade Council, in an interview with CNN. 

"But look, the concern about making sure that the US gets the right results in China without provoking a trade war comes from Main Street, and from the American companies that make things, produce jobs and export stuff."

Yerxa said his members, which include companies like Google, Walmart, Visa, General Electric and Caterpillar, have been offering input to the Trump administration wherever possible, but notes there's still "a bit of confusion" over which direction the White House may be going given ongoing internal discussions.
"We don't have any clear sense of where they are," said Yerxa, referring to any developing proposals. "A lot of the business community isn't being brought into details of that."
President Trump earlier this week promised a positive meeting with Xi.
"We'll have a good meeting and we're going to see what we can do," the President said at his Wednesday news conference following the midterm elections.
But fault lines between the US and China were on clear display Friday during a meeting between senior military officials, who challenged each other over the South China Sea, Taiwan, religious freedom and trade.
President Trump has made it a priority to take an aggressive stance against China for its unfair trade practices, including intellectual property theft and forced technology transfers. 

He's threatened to escalate the trade war further by taxing the remaining Chinese goods sold to the United States.
Many American manufacturers, farmers and lawmakers from both sides of the aisle say they appreciate the administration's efforts to change China's trade policies. 

But some argue the tariffs aren't the best way to address the issues. 

They pose a dilemma to US importers who must decide whether to absorb the higher cost of the goods or pass it on to consumers, and some exporters are hurting from China's retaliatory tariffs.

In his remarks Friday, Navarro also blamed Wall Street for the decline in manufacturing and the opioid crisis.
"If they want to do good, then spend their billions in Dayton, Ohio, in the factory towns of America where we need a rebirth of our manufacturing base and end to the opioid crisis -- which they helped create by off-shoring our production," he said.

Xitler Chinazism

Steve Bannon compares China to 1930s Germany and says US must confront Beijing now
By Benjamin Haas in Hong Kong

Steve Bannon has compared China to 1930s Germany, warning the country could go down the same dark path if the US fails to challenge its rise.
“A hundred years from now, this is what they’ll remember — what we did to confront China on its rise to world domination,” Bannon told the New York Times.
“China right now is Germany in 1933,” he said. 

“It’s on the cusp. It could go one way or the other. The younger generation is ultranationalistic.”
Donald Trump’s former senior White House aide is preparing to kick off a global anti-China crusade and the former White House chief strategist has called himself a “street fighter”, setting his sights on his next opponent: China. 

Bannon is convinced the US and China are destined for open conflict and has lambasted the country on everything from trade to intellectual property to North Korea ahead of speech in Hong Kong on Tuesday.
“China’s model for the past 25 years, it’s based on investment and exports,” he said. 

“Who financed that? The American working class and middle class. You can’t understand Brexit or the 2016 events unless you understand that China exported their deflation, they exported their excess capacity.”
“It’s not sustainable,” Bannon added. 

“The reordering of the economic relationship is the central issue that has to be addressed, and only the US can address it.”
Bannon left his position at the White House last month and said he would be “going to war for Trump against his opponents”. 

During his short tenure at Trump’s side, Bannon wielded significant influence on immigration and tax reform efforts by pulling the president to the right, and he will now seek to shape policy on China.

He has returned to leading Breitbart news, a far right website popular among many Trump supporters.
Bannon will be speaking at a conference hosted by CLSA, a unit of Citic Securities, China’s largest state-owned brokerage, and his speech will focus on “American economic nationalism and the populist revolt and Asia,” according to a CLSA spokeswoman. 

“He’s the man of the moment.”
“Donald Trump, for 30 years, has singled out China as the biggest single problem we have on the world stage,” Bannon said in an interview on CBS just days before his Hong Kong speech.
“I want China to stop appropriating our technology. China, through forced technology transfer and through stealing our technology, is cutting out the beating heart of American innovation.
“We’re not at economic war with China, China is at economic war with us.”
He admonished officials in George W Bush’s administration for their trade policies, accusing them of being weak.
Bannon will now take his fight to Chinese soil, speaking to a room filled with investors who owe much of their fortunes to China’s economic rise. 

Past speakers at the conference include Bill Clinton, Al Gore and George Clooney.
Bannon also echoed Trump on US strategy in reining in North Korea’s nuclear program, saying China was the key in dealing with the isolated state.
“If you’re a great power, how come you can’t control the Frankenstein monster you created in North Korea?” he asked in the interview with the New York Times.
“The solution to Korea runs through Beijing and we have to engage Beijing,” Bannon said in the CBS interview. 

“[North Korea] is a client state of China.”
Bannon said the US should consider “doubling down” on efforts to pressure China to act through a host of measures including sanctions, restricting access to US capital markets and penalising Chinese financial institutions.
“We have tremendous leverage to force China,” he said.

Bannon previously lived in Shanghai where he ran an online gaming company, but returned to the US in 2008. 

He has long been convinced the US is headed for a major confrontation with China.
“We’re going to war in the South China Sea in five to 10 years,” he said in March 2016 on a Breitbart podcast. 

“There’s no doubt about that.
Bannon was encouraged when Trump, before he was sworn into office, spoke directly with Taiwan’s president on the phone, infuriating China. 

China considers the self-ruled island a breakaway province, and Trump later bowed to pressure from son-in-law Jared Kushner, telling Xi Jinping the US would honourthe “One China” principle.

Orwell 2017

China’s Internet Crackdown Is Another Step Toward Digital Totalitarian State
By IAN WILLIAMS

Bill Clinton once mocked attempts by China to limit free speech online.
“Good luck,” he said. 

“That’s sort of like trying to nail Jell-O to the wall.”
But 16 years later, Beijing is taking steps to isolate the Chinese internet from the outside world, while drastically stepping up digital surveillance of those within and cracking down on online anonymity.
Chinese authorities are targeting virtual private networks (VPNs) and other tools that are used to circumvent the so-called "Great Firewall," the country’s system of strict internet censorship. 

VPNs provide anonymity and access to banned or blocked websites, such as Facebook and Twitter, and until recently have been used widely in China.
And from Oct. 1, users posting comments on web platforms or other internet forums will have to use their real identities. 

Forbidden content includes damaging the nation’s honor, endangering national security, spreading rumors and disrupting social order. 

The list encompasses just about anything the authorities decide they don't like.
China’s cyber-regulator has banned any VPNs it has not approved, leading to shutdowns across the country. 

Apple has removed VPNs from its China app store, in a move that Amnesty International described as a “deplorable decision.”

'Distract the Public and Change the Subject'
Until now, the Great Firewall, though formidable, has been porous. 

That's partly because of VPNs, but also as a result of the ingenuity of internet users themselves, playing cat-and-mouse with the authorities. 

Previous attempts at real-name registration have not been widely enforced.
The firewall has operated by blocking specific websites and by the use of key word filters, preventing searches of sensitive words or phrases, like “democracy,” “Tiananmen” or “June 4,” the date of the 1989 massacre in and around Tiananmen Square. 

This automated element is complemented by an estimated 100,000 internet police who check content.

A Chinese man stands alone to block a line of tanks in Beijing's Tiananmen Square on June 5, 1989. He was calling for an end to bloodshed against pro-democracy demonstrators and was pulled away by bystanders before the military vehicles continued on their way.

The system has become increasingly sophisticated, employing up to 2 million additional loyalists to join and steer conversations and debates, according to China's state-sponsored media, where this is seen as more effective than simply blocking them. 

These loyalists have been dubbed the “50 Cent Army,” since each member is paid that sum each time they post in favor of the Communist Party.
The system was analyzed earlier this year by three American academics: Gary King of Harvard University, Jennifer Pan of Stanford University and Margaret Roberts of the University of California at San Diego.
They estimate the Chinese government “fabricates and posts about 448 million social media comments a year.” 

They say the operation is massive and secretive, the goal being to “distract the public and change the subject.”

Winnie the Pooh
Even before the VPN ban, Xi Jinping had been progressively tightening controls, re-enforcing the firewall as users have found ways of circumventing censorship through the use of symbols, images or acronyms to comment on events or mock their leaders. 

One of the most popular images for Xi, a picture of Winnie the Pooh, who appears to share the president’s physique, was recently outlawed by the censors.
China has built the world’s most extensive system of internet control, but while it has always been wary of VPNs, sporadically trying to block them, it had grudgingly tolerated their use until recently. This is largely because of their widespread adoption by business leaders and academia, who prize secure communications and access to unfiltered information from outside China.
The latest moves suggest those concerns are trumped by the Communist Party’s desire for greater control. 

Beijing has given assurances that “official” VPNs will be made available to businesses which need them, but that is likely to trigger further alarm bells, given widespread Chinese economic espionage and intellectual property theft.
ExpressVPN, one of the biggest providers, said the move “represents the most drastic measure the Chinese government has taken to block the use of VPNs to date, and we are troubled to see Apple aiding China’s censorship efforts.”

On Monday, the South China Morning Post reported that a 26-year-old had been jailed for 9 months for selling VPN software which allowed users to "visit foreign websites that could not be accessed by a mainland [China] IP address.”
The crackdown has been given legal basis by a new cybersecurity law, which was introduced in June. James Zimmerman, the chairman of the American Chamber of Commerce in China, described it as “a step back for innovation in China.”

Images Blocked in Mid-Transit
Along with the crackdown on VPNs, researchers say there is a more concerted re-tooling of the Great Firewall. 

Citizen Lab, a University of Toronto-based group studying internet censorship, has found evidence of images of Nobel Peace Prize winner Liu Xiaobo blocked in mid-transit during chats on WeChat, a popular Chinese platform. 

This followed the death of the human rights activist from cancer while in police custody.
Citizen Lab's report describes this as “the first time we see image filtering in one-on-one chats, in addition to image filtering in group chats and WeChat moments."
Lotus Ruan, one of the Citizen Lab researchers, speculates that the latest crackdowns might be related to the forthcoming Communist Party Congress, now confirmed to begin on Oct. 18. 

The key five-yearly event will confirm the new leadership line-up and set policy direction.
“Censorship on Chinese internet is increased around political or sensitive events,” she said, but added that it could equally be a long-term trend for what she describes as the Chinese “intranet” — a system increasingly closed and separated from the rest of the world’s internet.
That’s echoed by the Electronic Frontier Foundation, a privacy and free-speech advocacy group, which believes the best indication of where the crackdown is leading will come later this year, after the Congress. 

“If VPNs remain absent, it may signal an even darker turn for Chinese internet censorship,” according to an EFF report.

There is other evidence that the latest crackdowns are more than just the ebb and flow of censorship, and part of a concerted effort by the Communist Party to assert what Xi calls “internet sovereignty.”
Cambridge University Press (CUP) recently blocked online access in China to 300 articles in its leading journal on the country, which were deemed by Beijing to be politically sensitive. 

It re-instated them after heavy criticism for colluding with Chinese censorship.
The South China Morning Post last month attended the Beijing Book Fair and reported that CUP isn’t the only Western publisher practicing self-censorship. 

It quoted several others saying they routinely keep sensitive topics out of publications available in China.
Publishers, as well as tech firms such as Apple, see complying with Chinese censorship as the price to be paid for access to what they hope will be a lucrative market.

Efforts are also underway in China to develop a “social credit system,” the idea being to encourage acceptable online behavior by harvesting and analyzing digital behavior. 

The developers say it will help stamp out fraud and provide a measure of individual credit-worthiness. 

But the government is also taking a strong interest, seeing its potential for social management, evaluating loyalty by analyzing the way an individual uses social media, what they post and share, and the sites they visit.
The implications of this sort of big data analytics are also raising alarm bells in the West, but the difference is that in China there is an almost total lack of internet privacy. 

Users have been described as “running naked” online, with their data fully exposed and unprotected.
China's measures to overcome obstacles that Clinton highlighted in his Jell-O comment have been motivated to a large extent by fear of an Arab Spring-style uprising — a revolution using social media to organize and coordinate protests and spread unfiltered information.
While it could well be that the latest levels of censorship ebbs after the forthcoming Communist Party Congress, tools are being lined up to reinforce and bolster the Great Firewall, cementing over the holes, and building behind it a separate intranet that the Economist magazine dubbed “The Digital Totalitarian State.”