On this episode of China Uncensored,
President Trump goes back in time
to the 1970s
to stop a master criminal
from stealing top secret technology.
Welcome back to China Uncensored.
I’m Chris Chappell.
On Monday August 14,
President Donald Trump announced an investigation
into China’s unfair trade practices.
“The theft of intellectual property by foreign countries
costs our nation millions of jobs
and billions and billions of dollars
each and every year.
For too long,
this wealth has been drained from our country
while Washington has done nothing.”
Yeah, Washington.
All you do is hang around
with that smug look on your face.
Anyway, Trump authorized
US Trade Representative Robert Lighthizer
to use the Trade Act of 1974
to investigate China’s unfair policies and practices—
especially with regard to
the theft of American intellectual property.
What’s that, Shelley?Trump actually ordered Lighthizer
to look into whether to investigate China
for unfair trade practices?
So it’s like a pre-investigation investigation.
But wait!
My favorite Chinese state-run media
was quick to inform us that Trump’s trade war,
sorry, investigation,
sorry, pre-investigation,
could backfire.
It says “China is expected to retaliate.”
And then it suggests that
“China should make use
of the World Trade Organization mechanism
to sue the US for trade protectionism.”
The angry reaction from Chinese state-run media
tells us one thing:
Trump’s pre-investigation is a great idea.
Even Democrats are supporting
Trump’s tougher stance on China trade.
Here’s what’s behind it.
For decades, the Chinese Communist Party
has been using a variety of unfair
and even downright illegal methods
to steal foreign technology
and then use it to outcompete the companies
that invented that technology.
Remember how I talked about WeChat?
Yeah, they borrowed a lot of their ideas
from foreign companies.
But what President Trump is referring to is more specific.
It’s about investigating whether the CCP
is forcing or pressuring American companies
to share their intellectual property
with Chinese companies.
The CCP has the long-term goal
of having Chinese companies learn from Western companies
and eventually replace them.
For example,
Ford Motor Company wanted to open
a bunch of car manufacturing plants in China.
But the Chinese government had a requirement:
Ford had to do it as a joint venture
with a local Chinese company,
Chang’an Motors.
And as another condition of access
to the Chinese market,
the Chinese government forced Ford to open
a research and development laboratory in China,
that they also had to share with Chang’an Motors.
There was a similar case with General Motors.
GM wanted to sell its electric hybrid Volt car in China.
The Chinese government provides huge subsidies
on qualifying electric vehicles,
as much as $19,000 off the retail price
of each car.
It’s to encourage Chinese consumers to buy them.
But they refused to give the subsidy for GM’s Volt.
That is, until GM agreed to transfer
some of their highly sensitive engineering technology
to a local Chinese competitor.
Here’s another example:
Under a recent Chinese cybersecurity law,
US technology companies are required
to store user data from Chinese customers
on servers inside China.
And according to this article,
technology firms are forced
to “turn over source code and encryption software
to the government,
potentially giving the Chinese government
a back door into private data
and proprietary technologies.”
Plus, this article about Apple says that
provincial authorities plan to
“create a working committee
chaired by communist party members
to oversee the US company’s iCloud facility”
that they’re building in China.
And I could go on and on with examples,
but you get the idea.
The CCP is forcing US companies
to turn over intellectual property
in exchange for being allowed
to do business in China.
So what President Trump did on Monday
was authorize US Trade Representative Lighthizer
to determine whether China should be investigated
for this under the Trade Act of 1974.
If Lighthizer decides to investigate,
and then if unfair trade practices are found,
the president can punish China
by imposing tariffs or other restrictions.
“And this is just the beginning.
I want to tell you that.
This is just the beginning.”
The Trade Act of 1974 was used widely
during the Reagan era,
but hasn’t been used as much in recent years,
because of a requirement to work with
the World Trade Organization before using it,
which Trump has implied he might not do.
But it’s not like previous administrations
did nothing about the Chinese Communist Party’s
intellectual property theft.
For example, under President Obama,
the White House focused on cracking down
on the CCP stealing intellectual property
by using hacking and cyber spying.
The Justice Department even brought criminal charges
against PLA soldiers for hacking into US companies,
including Westinghouse and US Steel.
But it’s not an easy issue to deal with,
since the Communist Party’s intellectual property theft
stretches back for decades.
According to this article,
“China’s relentless quest to be a technology leader
has deep roots,
stretching as far back as the 1950s.”
And in March of 1986,
the CCP began the “863 Program.”
A
ccording to the Office of the National Counterintelligence Executive,
Project 863 “provides funding and guidance
for efforts to clandestinely acquire US technology
and sensitive economic information.”
That was 1986.
But China’s intellectual property theft
really kicked off in 2001,
when China got access to the World Trade organization.
President Clinton did the leg work
to get China into the WTO,
and President Bush finished the job.
Their idea was to give US companies
better access to the Chinese market.
But what US companies got was this:
“Congressional leaders say China is engaged
in economic espionage on a scale
never seen before.”
So maybe, just maybe,
the WTO mechanisms aren’t doing
what they’re supposed to
to protect American companies.
That’s why President Trump is pulling
an obscure 1974 law out of the dusty,
avocado-green filing cabinet—
and putting it to its original purpose:
Giving the US government the power
to punish foreign countries
for unfair trade practices.
So will work?
Well, it’s going to be a long process.
For example,
if the US trade representative
decides to investigate China,
it may take up to a year for that to finish.
But one thing’s for sure.
The CCP doesn’t like it.
And they wouldn’t express “grave concern”
if it were nothing.
Thanks for watching China Uncensored.
Once again, I’m Chris Chappell.
See you next time.
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