This past week several reports emerged concerning the ongoing troubled relations between the United States and China. Secretary of Commerce Wilbur Ross slammed the Middle Kingdom for its failure to meet up to the norms expected of good state actors. Congress also released the details of a new threat assessment of China revealing them to be the dominant threat to the United States for the 21st century. The case of the Chinese compromising American politician Swalwell through his involvement with student turned spy Christine Feng (Feng Feng) only served to illustrate how serious and effective the threat facing the United States at home and abroad really is today.
Commerce Secretary Ross Slams Chinese Trade and Military Threats
This past Tuesday Wilbur Ross the United States Secretary of Commerce issued the latest warning that China has not managed to meet up to the norms of international state actors in abiding by the international community's trade rules. At the Milken Institute Asia Summit first day, Ross warned that China holds the dubious distinction of 210 of 539 countervailing duty and anti-dumping orders that the United States has imposed. Besides this, China occupies a “good portion” of the list of entities that America keeps to limit firms' ability to access U.S. suppliers because of national security reasons, Ross revealed.
America has responded by hitting suspected dumped products with duties to counteract the effects of selling them at unfair and artificially lower prices. A high-profile example of one Chinese company that is on the bad list is the international telecommunications behemoth Huawei. Secretary Ross explained at this summit that:
“China continues to be both the largest potential market and the principal military and economic threat in the region.”
Ross further warned that the latest agreement the Regional Comprehensive Economic Partnership that China and another 14 Asia Pacific nations signed off on will not address trade's “most sensitive issues.” Among these conflicts are the critical protection of intellectual property, sate owned companies' subsidies, and fair market access on an equal basis. Ross followed it up with a recognition of the impact that reducing the barriers to regional trade has, with:
“It is essential that we continue to encourage freer and fairer trade everywhere while protecting our national security and our economic interest. The U.S. is actually the least protectionist major economy.”
Chinese Trade War Lasts Nearly Two Years
For almost two long years the United States and China erected tariffs by way of retaliation against the products of one another. This kicked off a significant trade war that forced many nations to choose sides and endangered the world economy. A temporary lull in the war began as the two nations signed off on a “phase one” trade agreement. Ross admitted that this arrangement does “deal with some of our bilateral issues.” One of the provisions was that it committed the Chinese to purchasing minimally $200 billion in additional American services and goods in years 2020 and 2021 beyond what they bought back in 2017.
While Ross did admit that the Chinese had bought some agricultural products, it only amounted to a little more than $23 billion which was 70 percent of what they committed to for year 2020. China did purchase “lesser percentages” of various other promised goods that the deal specified, per Ross who added that:
“Now that China has announced its recovery from the pandemic, we hope they as a result will meet the phase one two year target.”
This should be possible for China that has managed to be among the few countries whose economies have grown in 2020. According to the International Monetary Fund prediction, the economy of China will grow by 1.9 percent on the year even as the United States' economy is anticipated to decline by 4.3 percent. This turned out to be less than the record GDP plunge predicted earlier by the Fed Chair for the year. The chart below reveals the anticipated growth for the U.S., China, and other major G7 economies:
The coronavirus created widespread economic havoc in the U.S., but it did not turn out to be as severe as in most of the other G7 and advanced economies.
Congressional Research Service Report Warns of Long Term Dangers from China
Warnings regarding dangers posed by the Chinese threat continued to emerge this past week. Fifteen congressional members from 11 different committees discussed a recent report that dealt with the geopolitical competition of the United States and the Communist Party of China with a concentration on the topics of Supply Chain Security, Ideological Competition, Technology, National Security, Competitiveness, and Economics and Energy. This report was put together through briefings with bi-partisan former and current administration officials, ambassadors, business execs, and numerous other outsider experts on the issue.
The CTF interfaced with over 130 individual leaders in these areas to gain specific knowledge and ideas for their comprehensive action plan. United States Secretary of State Mike Pompeo warned for the report during his speech on Communist China and the Free World's Future that:
“Look, we have to admit a hard truth. We must admit a hard truth that should guide us in the years and decades to come, that if we want to have a free 21st century, and not the Chinese century of which Xi Jinping dreams, the old paradigm of blind engagement with China simply won't get it done. We must not continue it and we must not return to it.”
This report investigated numerous ideological and geopolitically strategic conflict issues with the Middle Kingdom. In human rights abuses, this included the communist parties' crackdown on Hong Kong and actively enforcing the sanctions laws, considering if the communist parties' actions taken against the ethnic Uyghurs equated to a genocide, and implementing additional retaliations against the party in China for their wide-ranging human rights abuses ranging from forced harvesting of organs to violations against religious freedoms.
In the military and technology arenas, there are a host of issues where the report claims that China has not been held up to the necessary standard. The report calls for modernizing the American military force structure, operations, and posture so that it can effectively deter the Chinese Communist Party from its practiced expansion throughout not only the Indo-Pacific region but throughout the globe in places such as Africa. The report specifically calls for backing technology and devices that make it easier for pro-democracy groups to guarantee mobile access, enforce digital security, and re-launch websites safely after they have been hacked in cyber attacks.
Nuclear, Conventional Military, and Economic Issues All Addressed By the Report
The report addresses the nuclear deterrent triad with a goal to modernize it and conventional military capabilities that need to be constructed and fielded in order to effectively counteract the People's Liberation Army throughout the Indo-Pacific region. This includes calls for at least three to five percent real growth of the defense budget each year so that the PLA can be deterred and defeated. Also mentioned is the need to sharpen the focus for the military space command to be able to not only expand space exploration but to safeguard the national space capabilities through a combination of public and private financial and technological investment.
In an economic focus, the report makes several crucial recommendations that could impact economic growth and international markets. It strongly suggests cutting all material and financial support of the Chinese companies involved in the military industrial complex and of any firms that maintain ties to the military of the China Communist Party. It also recommends a holistic government focus on dealing with the security risks that the Chinese Communists have with regards to 5G networks so that the United States and her allies can counteract them.
Part of this goal includes gaining or maintaining crucial international leadership over the important future technologies such as quantum, AI, 5G network technology, and autonomous vehicles. Another warning is that export control policies need to be brought into alignment between the U.S. and its allies and partners to ensure that crucial technologies like semiconductor R&D and manufacturing equipment can be kept from companies and nations who represent a risk to national security. It highly recommends that trade policies be developed to safeguard against the stealing of intellectual property by the People's Republic of China.
Another hit at the Chinese is the encouragement to begin a trade agreement negotiation with the country of Taiwan that China refuses to acknowledge as more than a breakaway island province. One final critical economic recommendation that involves global scale involvement is that the Export Import Bank and Development Finance Corporation should be improved so that they can more effectively and aggressively counteract the Belt and Road Initiative and Chinese debt trap diplomacy that the Communist Party of China is aggressively pursuing around the globe. Now might be a good time to consider investment and retirement portfolio diversification into IRA-approved gold bullion, along with the top gold IRA companies.