Trump faults China’s economic policy as threat to US security

US President Donald Trump. (Bloomberg pic)

NEW YORK: The Trump administration accused China of hijacking intellectual property and pursuing industrial policies that threaten US economic and national security in a scathing report released by the White House as trade tensions with Beijing escalate.

The report, posted late Tuesday in Washington, claims that China’s spectacular economic growth “has been achieved in significant part through aggressive acts, policies and practices that fall outside of global norms and rules.”

“Given the size of China’s economy and the extent of its market-distorting policies, China’s economic aggression now threatens not only the US economy, but also the global economy as a whole,” according to the 35-page document.

The White House report emerged amid growing fears of an all-out trade war between the world’s two largest economies. Its release came a day after President Donald Trump ordered US trade officials to consider imposing tariffs on an additional US$200 billion in Chinese imports — with another US$200 billion to be added if Beijing retaliates.

Just last week, Trump unveiled plans to implement previously announced tariffs on US$50 billion in primarily industrial goods. China has said it will match those levies in kind, and has already responded to earlier duties on metals imports.

The US government has long complained that China obtains American intellectual property and technology through underhanded means, and the White House report restated many of those concerns, including about hacking, physical theft of trade secrets and evasion of export control laws.

The Chinese government says that it is working to improve intellectual property protection.

“Physical theft through economic espionage by company insiders or others who have trusted access to trade secrets and confidential business information provides China with a significant means to acquire US technologies and intellectual property,” the report charges.

The report, titled “How China’s Economic Aggression Threatens the Technologies and Intellectual Property of the United States and the World,” does not make any specific policy recommendations. Yet it codifies some of the administration’s arguments for a more aggressive stance toward China over trade.

Besides the volleys of tariffs on goods from China, the Trump administration is also considering measures that would restrict Chinese investment in sensitive American technology.

The report also accuses China of openly protecting domestic industries from competition and imports through tariffs, regulation and restrictions on foreign ownership. It also says China offers financial support to bolster its exports to foreign markets.

It adds that Chinese state-owned companies pose an additional threat to overseas firms, given their close ties to the Beijing government.

The government itself dominates many industries and plays an enormous role in investment decisions and strategy. For instance, the report says, until 2014, state-supported foreign investment funds were directed toward acquiring natural resources. Now, that focus has shifted to technology.

“China’s biggest sovereign wealth fund, the China Investment Corporation, has used a significant fraction of the US$800 billion of assets under management for a venture fund focusing on Silicon Valley,” the report says.

The report was prepared by the White House Office of Trade and Manufacturing Policy, an entity led by Peter Navarro, who has emerged as a forceful advocate within the administration for an aggressive tariff policy toward China. As supporting evidence, it cites surveys by other government agencies and policy institutes as well as newspaper articles.

The US imported US$505 billion of goods from China last year and exported about US$130 billion, leaving a 2017 trade deficit of US$376 billion, according to US government figures.