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Tightening the Noose around China

China-U.S. Focus 2019-02-20

China-US relations used to feature both cooperation and competition. But the Trump administration has identified China as the primary strategic competitor, whose rise must be thwarted or even stopped.

The US ideally wants total interruption of economic relations with China. In the past forty years, Chinese economic development has benefited from American money and technology. It would be ideal if these links could be severed. But that will not be possible. The level of economic interdependence between China and the US is uniquely high among major countries such that the US will have to pay a huge price to sever the various ties. It is no longer possible for American companies that have already taken root in China or sell mainly to the Chinese market to decouple now.

The Trump administration is interested in technological decoupling. The Chinese economy depends on technology. If a wall can be built between the US and China in the hi-tech sector to prevent the latter from getting technology from the former, Chinese economic growth will surely slow down substantially.

I went to the US at the end of November last year and had the opportunity to talk to an American expert close to the Trump administration. He had been very straightforward when talking to Trump about China-US economic relations, arguing that the only advantage the West held against China is hi-tech as China now has the market, money, and manufacturing capacity.

The Trump administration is also interested in decoupling the defense industrial chain. Last October, the US DOD published a report, revealing that the US defense industry has to rely on China for 280 parts and components and important raw materials and fuels. In other words, should there be war between the two, China would be a position to cut off the American defense supply chain. To create a logistics system that functions safely and is free from the Chinese constraints in a war, the US has made up its mind to decouple from China. Many American companies, including those investing in China, used to produce parts and components for the American defense industry by leveraging the low costs in China. Now they are required by the US government to relocate from China to Vietnam or India or else they no longer get DOD contracts. The US also imports in large quantities rare-earths from China, without which the production of sophisticated equipment will be impossible. And now the US considers whether it will get rare-earths from other countries and whether it can find a substitute for it.

The Trump administration’s published its first national security report at the end of 2017. It states that China’s rise has been to a large extent attributable to it leveraging the openness of higher education and research institutions to Chinese scholars and students in the past forty years. The statement has led to policy changes and the US now increasingly restricts Chinese students and scholars from studying those disciplines or engaging in scientific research in the US.

Restrictions also apply to Chinese media and cultural organizations, including foundations, and even Chinese diplomats engaging in cooperation and exchanges in the US. It was quite unimaginable in the past that Chinese diplomats would not be granted visas by the US. Such cases are increasing every day now. Various restrictions have been imposed on Chinese diplomats in the US. Why? To prevent Chinese infiltration into American society. In other words, the US wants to prevent China from both acquiring core technologies from America and infiltrating and influencing American society through cultural, diplomatic, and political channels.

The Trump administration wants to exert pressure on China. Chinese enterprises and individuals are accused of violating American intellectual property rights or other relevant policies and targeted in judicial actions. Last year, the US sanctioned the Chief of General Armament Department, Central Military Commission, on the grounds of China importing Su-39 fighter jets and the S-400 air defense system. There had been no precedent of sanctioning China for purchasing weapons from another country. Other examples include the series of measures to suppress Huawei and actions against ZTE last year.

This is the Trump administration’s China policy.

(Source: China-U.S. Focus)

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