US Needs Bold China Economic Policies, Actions

(Editor's Note: The following opinion column does not constitute an endorsement of any political party or candidate on the part of Newsmax.)

National elections next month will determine which congressional party majority and White House administration will preside over America’s economic and military competition with Communist China, broadly regarded as our nation’s greatest threat in domestic and global security domains.

The Trump campaign platform proposes to arm its defensive arsenal with tough tariff policies that discourage and prevent Beijing and sponsored surrogate international organizations from unloading cheap products on American consumers while simultaneously bankrupting domestic industries, bleeding workforce jobs, and driving allied U.S. makers overseas.

Presidential candidate Harris has not articulated any notable strategic China policy divergences from weak positions of the Biden-Harris administration.

During a Sept. 25 speech in Pittsburg, V.P. Harris vowed, “I will never hesitate to take swift and strong measures when China undermines the rules of the road at the expense of our workers, our communities and our companies.”

The central problem here is that Beijing has no inclination whatsoever to respect international rules of the road nor reasons to fear penalty repercussions from highway police.

The Tariff Tradeoff Between Cheap Products and Jobs to Pay for Them

In addition to revoking China’s permanent normal trade relations status over World Trade Organization agreement violations, phasing out imports of essential supply chain goods such as electronics, steel and pharmaceuticals, and stopping them from buying up American real estate and industries, former President Trump has indicated plans to impose stiff tariffs on many Chinese products.

Opponents of Trump tariff policies argue that Americans will end up paying higher prices for certain products.

Yes, but also consider the costs to those same consumers along with workforce employment when Chinese government controlled and subsidized companies run American manufacturers and retailers out of business to gain greater leverage over critical material and equipment supply chains.

Crushing Market Competition with Chinese Government Subsidies

China has weaponized global economic competitiveness with a combination of policy implementation tools including direct industry subsidies, tax breaks, below-market credit, and state investments which are heavily concentrated in key policy sectors including computer software/semiconductors, green technology, and electric vehicles (EVs).

According to the Center for Strategic & International Studies (CSIS), in 2023, China was the largest manufacturer of EVs, producing about two-thirds of the annual global supply (8.9 million) and exporting 1.2 million.

CSIS reports that Chinese government subsidies contributed to a more than $70 billion 2024 U.S. trade balance shortfall across numerous markets including telecommunications, civilian aircraft, computer accessories, industrial machinery, pharmaceutical preparations, and passenger cars.

Chinese Control of Critical Industry Supply Chain

The auto sector including parts manufacture and rare earth mineral supplies for EV batteries has become a primary target for Chinese market dominance including U.S. markets.

And with the United States-Mexico-Canada (USMA) Free Trade Agreement fast becoming a policy roadmap for the world, China clearly recognizes that any multinational with a presence in Mexico can set up shop in Mexico with the U.S. as its No. 1 automotive target.

Whereas eight auto parts companies were already in Mexico prior to the enactment of the 2018 Section 301 tariffs against China initiated by the former Trump administration, 12 new ones have moved into Mexico as of year-end 2023.

More than 20 Chinese auto parts manufacturers and car makers including native brand Chery and MG Motors (purchased by SAIC Motors of Shanghai in 2007) have moved operations into Mexico since June 2022, representing a combined $7 billion investment.

Last year, Tesla announced a $5 billion assembly line in Nuevo Leon state, roughly a four-hour drive from the Texas border with a capacity to build roughly one million EVs annually.

Policing Chinese Intellectual Property Theft

Theft of global intellectual property should be recognized as an inherent longstanding feature of Chinese Communist Party-State economic policy.

As observed by the Johns Hopkins University Paul H. Nitze School of Advanced International Studies (SAIS), “the current system of IP protection inside China is a politicized, legally unregulated minefield that imposes such high risks on any company trying to innovate, whereby the far safer route for businesses is to forgo innovation altogether in favor of imitation, acquisition, and sometimes adaptation.”

Although China has laws on consumer protection, product safety, the environment, human rights, property rights, and myriad other issues, as well documented, they mean nothing.

SAIS notes that, in practice, “China has two systems: the formal fairy tale written into its Constitution and laws, and the harsh reality of [Chinese Communist Party] (CCP) dictatorship and caprice.”

In the second, “Judges, lawyers, police, and regulators are subordinate to the CCP; and private businesses without guanxi (connections) and a baohusan (umbrella) in the CCP cannot hope to enforce contracts, conduct discovery, hire a lawyer, or even publicly complain without fear of arrest, loss of job or business, internal exile, and imprisonment.”

SAIS concludes that the totalitarian system, along with its other more pernicious consequences, also discourages and depresses innovation, which in turn encourages IP theft at the expense of the U.S. and other industries and consumers who must cover costly development expenditures and business opportunity losses.

Continuation of weak Biden-Harris trade policies with China will put America, our households, our businesses, and our national security further behind our most powerful adversary.

Any extra near-term costs of bold leadership including tough tariffs will be dwarfed by long-term and potentially permanent consequences of Chinese economic dominance and exploitation if we delay.