Chinese Protectionism, U.S. Passivity Raise Spector of Tech Trade War

By Mike Elgan  |  Posted 2014-08-11 Print this article Print
China Trade

For example, approximately the same number of Windows PCs are sold in China as are sold in the United States, yet Microsoft’s revenue for China is about 5 percent what it is in the US. Microsoft has been sticking it out, hoping that someday Chinese consumers, business and the government will actually pay full price for Windows like everybody else.

Now, just as foreign companies are finally making real gains, the Chinese government signals its unwillingness to allow foreign and especially American companies gain a major foothold.

So what’s the right response by the US government?

The range of options includes everything from doing nothing to aggressively pursuing a trade war with the country. A trade war is defined as “a situation in which countries try to damage each other's trade, typically by the imposition of tariffs or quota restrictions.”

Right now, the President Barack Obama's administration is being passive in the face of this enormous attack on U.S. companies in China.

The worst outcome would be an over-reaction on the part of the U.S. government. But doing nothing is the second worst option.

I believe there should be an equal and opposite response to every move the Chinese government makes against U.S. technology companies.

For example, the government could start imposing special taxes on any consumer electronics device assembled in China, which would incentivize the likes of Foxconn (a Taiwanese company) to divert investment in new factories away from China and toward countries like Brazil, Mexico and the United States. The official reason could be humanitarian grounds—because of worker abuse and child labor in China.

In fact, tariffs and restrictions could be applied to any or all goods and services coming from China—the U.S. runs a pretty consistent trade deficit with China anyway.

I don’t advocate a trade war. What I’m in favor of is free trade between the United States and China. But what we have now is a one-sided trade war. China is working hard to damage U.S. trade in China, while the U.S. is doing very little to restrict Chinese trade within the U.S.

(Critics of U.S. policy talk a lot about a 2011 Congressional report citing Huawei and ZTE networking equipment as security threats that recommended that the US government not buy products from these companies. All that became of this was that two years later, some U.S. agencies, including NASA, the Department of Justice and Department of Commerce were required to get permission from the FBI before buying IT equipment from these two companies. This is not comparable to the scope and scale of Chinese actions against U.S. products.)

The George W. Bush and Obama administrations have both done massive damage to the U.S. technology industry by allowing the NSA’s indiscriminate and reckless exploitation of US technology companies to spy on the world.

It’s time now that the U.S. government actually do its job and protect U.S. interests by standing up to the Chinese Communist Party and denying Chinese companies some access to the world’s largest consumer market in equal measure to the access to Chinese consumers denied to U.S. companies.


Submit a Comment

Loading Comments...
Manage your Newsletters: Login   Register My Newsletters

Rocket Fuel