If you’re not aware of it, “Made in China 2025” is the Chinese government’s plan to dominate the high technology industries of the 21st century and climb the value chain in manufacturing. In general I agree with the editors of Bloomberg‘s views:
To be clear, China isn’t wrong to harbor such ambitions. And, so far as the basic economics goes, its success needn’t disadvantage the U.S. or any other country. The U.S. didn’t get rich in the last century at Europe’s expense: Its innovations raised living standards everywhere. That’s what trade and commerce do. In a well-functioning global system, successful economies prosper together.
In many ways, this is still happening. Take just one instance of China’s emerging technological prowess: Its success as a manufacturer of solar panels has lowered the cost of clean energy worldwide.
But the U.S. and its partners have two pressing and legitimate concerns. First, China is seeking technological superiority in fields — artificial intelligence, robotics, autonomous vehicles, augmented reality — that will be crucial for military, not just civil, innovation. The U.S. and its allies need to maintain their edge on the battlefield.
Second, China isn’t playing by the rules. It wants access to other countries’ markets and technologies but is slow to grant access to its own. And its technological push has often relied on questionable or outright illegal methods — from rampant cyber-theft of commercial and military secrets, to subtler violations of the spirit if not always the letter of the country’s obligations as a member of the World Trade Organization.
If anything they understate the issue. Requiring companies that wish to trade in China to disclose trade secrets and share intellectual property isn’t the full extent of China’s predation. The Chinese government has an active program of hacking both government and private companies’ networks to steal whatever they can.
I have always believed that admitting China to the WTO was an error but that particular horse has already escaped the barn and the harm done by it cannot be undone. What harm? U. S. manufacturing employment collapsed following China’s WTO admission as its trade with the U. S. exploded.
What then is to be done? I have always believed that some form of reciprocity was the correct approach to dealing with China. For Chinese high tech products to be sold in the U. S., the underlying technology should be placed in the public domain. Tariffs should be imposed on Chinese goods in the amount of subsidies provided by the Chinese government. And so on.
I’ll be interested in seeing how thinking in the U. S. on this subject develops. I don’t know how the U. S. can continue to prosper by doing all the spadework while China reaps the benefits.
I think the ZTE ban (an order preventing American firms from doing business with ZTE for violating Iran and North Korean sanctions followed by not complying with a US settlement) was more effective then the threat of tariffs based on how ZTE / Chinese government reacted.
I infer that the Chinese government think a lot of firms have violated American laws.
Again, Bloomberg is not a fan of President Trump – which speaks to the change in the “consensus” American view on relations with China. It uncharted territory since the “old consensus” view has lasted for almost 50 years.
I can’t hep but wonder if that’s what Trump’s political foes fear most: his moving the Overton Window.
On China, was the Overton Window going to move anyway and Trump just sped it up?
On the other hand, lets not pronounce doom and gloom. There are still many issues like North Korea where cooperation is important. And a more open China with a more balanced relationship with the rest of the world benefits the Chinese as well.