Contribute
CONNECT:

research

China’s Trade Policy: Cheat And Repeat

- April 12, 2018

China Has Carried Out Discriminatory And Unfair Trade Practices To The Detriment Of The U.S. Economy And Consumers

______________­­____________­__

TOP TAKEAWAYS

  • Despite agreeing to operate by the rules of the World Trade Organization, China has consistently failed to follow through on its promise of free and fair trade.
  • China has been named the world's "principal IP infringer" with thousands of Chinese actors continuing to engage in the "rampant" theft of trade secrets and intellectual property.
  • China has imposed significant trade barriers through the restriction of patents and the inconsistent application of trade guidelines which has hurt foreign pharmaceutical companies and bolstered China's domestic industry.
  • The Chinese government has subsidized steel and aluminum production, flooding the U.S. market with an artificially cheap product which has led to the loss of thousands of American jobs and caused serious U.S. national security concerns about the supply of these vital metals.
  • China has blocked the importation of U.S. agricultural products, especially U.S. beef and corn products, and may be "substantially" exceeding WTO standards for the subsidization of its domestic agricultural sector.
  • China's auto tariffs and laws limiting foreign direct investment have hindered the ability of foreign automakers to gain market access and establish a foothold in that country.

______________­­____________­__

CHINA'S UNFULFILLED PROMISE ON FREE AND FAIR TRADE

When China Joined The World Trade Organization In 2001 They Agreed To Operate In Accordance With WTO Rules, However They Have Largely Failed To Follow Through With These Commitments

On November 10, 2001, The World Trade Organization's Ministerial Conference Approved The Text Of The Agreement For China's Entry Into The WTO. "The WTO's Ministerial Conference approved today (10 November) by consensus the text of the agreement for China's entry into the WTO. China will become legally a member 30 days after the WTO receives notification of the ratification of the agreement by China's Parliament." (Press Release, "WTO Ministerial Conference Approves China's Accession," World Trade Organization , 11/10/01)

China's Accession To The World Trade Organization Was Accompanied By Their Commitment To "Liberalize Its Regime" And Offer A "Predictable" Trade Environment That Operated In Accordance With WTO Rules. "As a result of this negotiation, China has agreed to undertake a series of important commitments to open and liberalize its regime in order to better integrate in the world economy and offer a more predictable environment for trade and foreign investment in accordance with WTO rules." (Press Release, "WTO Ministerial Conference Approves China's Accession," World Trade Organization , 11/10/01)

China Has Consistently Promised To Open Its Markets And Level The Playing Field For Foreign Companies But "Largely Failed To Follow Through On These Promises." "China has consistently promised to further open its markets since Xi took office but has largely failed to follow through on those promises. It has also ignored years of entreaties from the U.S. administration and business community to level the playing field for foreign companies and resolve problems through dialogue and negotiation." (Simon Denyer, "Facing Trade War With U.S., China's Xi Renews Vow To Open Markets, Import More," The Washington Post , 04/10/18)

CHINA IS RESPONSIBLE FOR WIDESPREAD THEFT AND ABUSE OF U.S. INTELLECTUAL PROPERTY

China Has Been Named The World's Principal Culprit Of Intellectual Property Theft And Has Been Responsible For "Rampant" Theft Of U.S. Companies' Trade Secrets

According To The Commission On The Theft Of American Intellectual Property, China Is The "World's Principal IP Infringer" And Is "Deeply Committed" To Policies Such As The "Acquisition Of Foreign Technology And Information" That Contribute To "Greater IP Theft." "China, whose industrial output now exceeds that of the United States, remains the world's principal IP infringer. China is deeply committed to industrial policies that include maximizing the acquisition of foreign technology and information, policies that have contributed to greater IP theft." ("Update To The IP Commission Report On The Theft Of American Intellectual Property," The Commission On The Theft Of American Intellectual Property , 2/17, Pg. 1)

  • The Commission On The Theft Of American Intellectual Property Is "An Independent And Bipartisan Initiative Of Americans From The Private Sector, Public Service In National Security and Foreign Affairs, Academe, And Politics. " "The Commission on the Theft of American Intellectual Property is an independent and bipartisan initiative of leading Americans from the private sector, public service in national security and foreign affairs, academe, and politics. ("About The Commission," The IP Commission , Accessed 03/22/18)
  • Admiral Dennis C. Blair, Chairman Of The IP Commission, Is The Former Commander In Chief Of The U.S. Pacific Command And Former U.S. Director Of National Intelligence For President Barack Obama. "Dennis C. Blair is the Chairman of the board and Distinguished Senior Fellow at the Sasakawa Peace Foundation USA and the Co-Chair of the Commission on the Theft of American Intellectual Property. He is the former commander in chief of the U.S. Pacific Command and the former U.S. director of national intelligence. Prior to rejoining the government in 2009, Admiral Blair held the John M. Shalikashvili Chair in National Security Studies with the National Bureau of Asian Research and served as deputy director of the Project for National Security Reform." ("Dennis C. Blair," The IP Commission , Accessed 03/22/18)

The Commission Has Called IP Theft A "Grave Threat To The U.S." And Has Estimated The Annual Cost To The U.S. Economy From Counterfeit Goods, Pirated Software, And The Theft Of Trade Secrets To Be As High As $600 Billion. "While some indicators show that the problem may have improved marginally, the theft of IP remains a grave threat to the United States. Since 2013, at the release of the IP Commission Report, U.S. policy mechanisms have been markedly enhanced but gone largely unused. We estimate that the annual cost to the U.S. economy continues to exceed $225 billion in counterfeit goods, pirated software, and theft of trade secrets and could be as high as $600 billion." ("Update To The IP Commission Report On The Theft Of American Intellectual Property," The Commission On The Theft Of American Intellectual Property , 2/17, Pg. 1)

"IP Theft By Thousands Of Chinese Actors Continues To Be Rampant ." "IP theft by thousands of Chinese actors continues to be rampant, and the United States constantly buys its own and other states' inventions from Chinese infringers." ("Update To The IP Commission Report On The Theft Of American Intellectual Property," The Commission On The Theft Of American Intellectual Property , 2/17, Pg. 1)

Actors Affiliated With The Chinese Government And Military Have Infiltrated The Computer Systems Of U.S. Companies And Stolen Their Intellectual Property. "Most troubling are reports that actors affiliated with the Chinese government and the Chinese military have infiltrated the computer systems of U.S. companies, stealing terabytes of data, including the companies' intellectual property (IP), for the purpose of providing commercial advantages to Chinese enterprises." ("2017 National Trade Estimate Report On Foreign Trade Barriers," Office Of The United States Trade Representative , 3/17, Pg. 78)

In March 2017, The U.S. Trade Representative Called The Protection And Enforcement of Trade Secrets In China "A Serious Problem" And Noted That The Theft Of Trade Secrets For The Benefit Of Chinese Companies Has Occurred Within And Outside China. "The protection and enforcement of trade secrets in China is a serious problem and has been the subject of high-profile attention and engagement in recent years. Thefts of trade secrets for the benefit of Chinese companies have occurred both within China and outside of China." ("2017 National Trade Estimate Report On Foreign Trade Barriers," Office Of The United States Trade Representative , 3/17, Pg. 78)

Chinese Applicants Have Registered U.S. Trademarks In Bad Faith And "Held Them For Ransom" Or Used The Trademarks To Profit Off Of U.S. Companies' Global Reputation

According To The United States Trade Representative (USTR), U.S. Companies Across Several Sectors Have Been Confronted By Chinese Applicants Registering Their Trademarks And "Holding Them For Ransom" Or Working To Build Businesses Off U.S. Companies' Global Reputation. "U.S. companies across industry sectors continue to face Chinese applicants registering their marks and 'holding them for ransom' or seeking to establish a business building off of U.S. companies' global reputations." ("2017 National Trade Estimate Report On Foreign Trade Barriers," Office Of The United States Trade Representative , 3/17, Pg. 78)

Thefts Of Trade Secrets For The Benefit Of Chinese Companies Have Occurred Both Inside And Outside China With "Impunity." "Thefts of trade secrets for the benefit of Chinese companies have occurred both within China and outside of China. Offenders in many cases continue to operate with impunity." ("2017 National Trade Estimate Report On Foreign Trade Barriers," Office Of The United States Trade Representative , 3/17, Pg. 78)

In May 2016, Chinese Sports Company Uncle Martian, Bearing An "Uncanny Resemblance" To The Baltimore Sports Company Under Armor, Was The Latest In A Line Of Chinese Companies Seeking To Capitalize On The Fame Of Foreign Counterparts. "A Chinese sports apparel company is dismissing allegations that its logo bears an uncanny resemblance to the one used by Baltimore-based Under Armour. Uncle Martian, as the brand is mystifyingly known, appears to be the latest in a long line of Chinese companies seeking to capitalize on the fame of their better-known foreign counterparts. Its logo, a letter 'U' on top of an upside-down 'U,' became the subject of widespread ridicule among Chinese Internet users last week and has drawn threats of a lawsuit from Under Armour." (Feleicia Sonmez, and Yang Jie, "China's Uncle Martian Says It Has "Nothing To Do With' Under Armor," The Wall Street Journal , 05/03/16)

CHINA HAS IMPOSED SIGNIFICANT TRADE BARRIERS ON FOREIGN PHARMACEUTICAL COMPANIES

Despite Previous Commitments, Significant Trade Barriers And Rampant Infringement Continue To Obstruct The Ability Of Foreign Pharmaceutical Companies To Operate Within The Country

China Committed To Allowing Foreign Suppliers To Distribute Pharmaceuticals By December 2004, And Began Issuing Licenses In 2005. "China committed to allow foreign suppliers to distribute pharmaceuticals by December 11, 2004, and it began accepting applications from and issuing wholesale licenses to foreign pharmaceutical companies about six months after that deadline." ("2017 Report To Congress On China's WTO Compliance," United States Trade Representative , 1/18, Pg. 120)

As Of 2018, China's Inability "To Provide Effective Enforcement Against Infringement Of Pharmaceutical Patents" Is One Of "Many Concerns." "Meanwhile, many other concerns remain, including the need to provide effective protection against unfair commercial use of undisclosed test or other data generated to obtain marketing approval for pharmaceutical products, and to provide effective enforcement against infringement of pharmaceutical patents. In 2017, China issued draft measures in this area, but they have not yet been finalized." (Robert E. Lighthizer, "2018 National Trade Estimate Report On Foreign Trade Barriers," United States Trade Representative , 2018, Pg. 99)

  • Wu Zhen, Vice Minister Of China FDA Has Stated That With Regards To The Pharmaceutical Industry "China's Protection Of Intellectual Properties Is Still Lacking." "The government said it will also explore a new system linking drug approvals to patent status. This could potentially delay the introduction of generics when there are legal challenges posed by the patent holder. China's protection of intellectual properties is still lacking, 'and this is also an important reason that restricts the development of our medical innovation industry,' said Wu Zhen, vice minister of China FDA, at a press briefing webcast on Monday." ("Big Pharma Gets Boost As China Speeds Up New Drug Approvals," Bloomberg , 10/8/17)

China's System For Protecting Pharmaceutical Products "Either Remain[s] Opaque Or Fall[s] Short Of The Standards Prevailing In The United States And Other Jurisdictions." "Meanwhile, several other aspects of China's system for protecting pharmaceutical products either remain opaque or fall short of the standards prevailing in the United States and other jurisdictions. For example, the guidelines do not explicitly apply to both the sufficiency of disclosure and inventiveness." ("2017 Report To Congress On China's WTO Compliance," United States Trade Representative , 1/18, Pg. 111)

China's Guidelines For Pharmaceutical Patent Applications Have Become More Restrictive, And As A Result, Applications For Pharmaceutical Patents Are Denied In China Even As The U.S. And Others Are Granted Patents For The Same Innovations. "As a result, applications for pharmaceutical patents have been denied in China, even as U.S. and other leading patenting authorities granted patents for the same pharmaceutical innovations. In addition, patents granted prior to the adoption of the more restrictive SIPO guidelines have been vulnerable to invalidation challenges in China based on the retroactive application of these guidelines." ("2017 Report To Congress On China's WTO Compliance," United States Trade Representative , 1/18, Pg. 110)

Chinese Manufacturers Of Generic Pharmaceutical Products Have Been Able To Obtain Approval To Sell Their Generics Prior To The Expiration Of The Protection Period For The Original Foreign Pharmaceutical Product, And In Some Cases "Even Before The Originator's Product Has Been Approved." "The United States also continues to be concerned about the extent to which China provides effective protection against unfair commercial use of, and unauthorized disclosure of, undisclosed test or other data generated to obtain marketing approval for pharmaceutical products. China's law, and a commitment that it made in its WTO accession agreement, require China to ensure that no subsequent applicant may rely on the undisclosed test or other data submitted in support of an application for marketing approval of new pharmaceutical products for a period of at least six years from the date of marketing approval in China. However, Chinese law does not include an appropriate definition of the term "new chemical entity" for purposes of identifying test or other data entitled to protection. There is evidence that, as a result of this situation, generic manufacturers of pharmaceutical products have been granted marketing approvals by China's CFDA prior to the expiration of the six-year protection period and, in some cases, even before the originator's product has been approved." ("2017 Report To Congress On China's WTO Compliance," United States Trade Representative , 01/18)

CHINA'S SUBSIDIZATION AND DUMPING OF DOMESTIC METALS HAS JEOPARDIZED THE UNITED STATES' PRIMARY METALS INDUSTRY AND NATIONAL SECURITY

China Has Sponsored The Subsidization And Dumping Of Cheep Steel Which Has Hurt The U.S. Economy And Been Blamed For Thousands Of Layoffs

The Chinese Government Has Contributed To "Massive Excess Capacity" Of Steel And Aluminum In China And Has Hurt "U.S. Producers And Workers In Both The United States And Third Country Markets Such As Canada And Mexico Where U.S. Exports Compete With Chinese Exports." "In manufacturing industries like steel and aluminum in particular, China's economic planners and their government actions and financial support have contributed to massive excess capacity in China, with the resulting over-production distorting global markets and hurting U.S. producers and workers in both the United States and third country markets such as Canada and Mexico, where U.S. exports compete with Chinese exports. ("2017 Report To Congress On China's WTO Compliance," The Office Of The United States Trade Representative , January 2018, pg. 13)

Excess Capacity Of Steel In China Has Lowered Global Prices And Made It Difficult For Even The "Most Competitive [U.S.] Producers To Remain Viable." "Excess capacity in China - whether in the steel industry or other industries like aluminum or soda ash - hurts U.S. industries and workers not only because of direct exports from China to the United States, but because lower global prices and a glut of supply make it difficult for even the most competitive producers to remain viable. ("2017 Report To Congress On China's WTO Compliance," The Office Of The United States Trade Representative , January 2018, pg. 13)

  • In 2016, The United Steelworkers Union Blamed Steel Imports For More Than 19,000 Layoffs Over The Last Few Years. "The United Steelworkers union blames imports for more than 19,000 layoffs of steelworkers and iron ore miners over the last few years." (Joseph Pete, "Report Finds Chinese Steel Heavily Subsidized," The Times Of Northwest Indiana , 07/28/16)

In 2018, The U.S. Department Of Commerce Concluded Present Quantities Of Steel Imports Weakened The United States' Internal Economy And Threatened "To Impair The National Security" Of The Country. "Based on these findings, the Secretary of Commerce concludes that the present quantities and circumstance of steel imports are 'weakening our internal economy' and threaten to impair the national security as defined in Section 232.'" ("The Effect Of Imports Of Steel On National Security," U.S. Department Of Commerce , 01/11/18, pg. 5)

Amid Shrinking U.S Domestic Metal Production, China Has Sponsored The Subsidization And Dumping Of Aluminum Which Has Impaired U.S. National Security

In January 2017, The U.S. Department Of Commerce Found That Imports Of Aluminum "Threaten To Impair The National Security" And Have Left The U.S. At Risk Of Being "Almost Totally Reliant On Foreign Producers." "Based on these findings, the Secretary of Commerce has concluded that the present quantities and circumstance of aluminum imports are 'weakening our internal economy' and threaten to impair the national security as defined in Section 232. The Department of Defense and critical domestic industries depend on large quantities of aluminum. But recent import trends have left the U.S. almost totally reliant on foreign producers of primary aluminum." ("The Effect Of Imports Of Aluminum On National Security," U.S. Department Of Commerce , pg. 5, 01/17/18)

  • The Commerce Department Noted The U.S. Aluminum Industry "Is At Risk Of Becoming Unable To Satisfy Existing National Security Needs." "The U.S. is also at risk of becoming completely reliant on foreign producers of high-purity aluminum is at risk of becoming unable to satisfy existing national security needs or respond to a national security emergency that requires a large increase in domestic production that is essential for key military and commercial systems. The domestic aluminum industry." ("The Effect Of Imports Of Aluminum On National Security," U.S. Department Of Commerce , pg. 5, 01/17/18)

In February 2018, The Commerce Department Determined That Chinese Aluminum Foil Imports, In Particular, Were Being Sold At Less Than Their Value And Chinese Producers Were Benefiting From Government Subsidization. "The U.S. Commerce Department said on Tuesday it had made a final determination that imports of aluminum foil from China are being sold in the United States at less than their fair value and producers are benefiting from subsidies from Beijing." ("U.S. Finds China Aluminum Foil Imports Dumped, Subsidized," Reuters , 02/27/18)

As Of 2018, The Bureau Of Labor Statistics Reported Employment In The Primary Metals Industry Has Declined From 624,700 Jobs In January 2000 To 376,500 Jobs As Of January 2018. ("Coal Mining," Bureau Of Labor Statistics , Accessed 03/02/18)

CHINA HAS BLOCKED THE IMPORTATION OF U.S. AGRICULTURAL PRODUCTS, INSTEAD FLOUTING WTO REGULATIONS TO SUBSIDIZE DOMESTIC FARMERS

China Has Unfairly Blocked The Importation Of U.S. Beef And Corn Products

As Of 2017, China Was The "Least Transparent And Predictable" Of The World's Major Markets For Agricultural Products Due In Part To "Capricious Practices" And "Uneven Enforcement Of Regulations And Selective Intervention" By Chinese Authorities. "Notwithstanding this success, China remains among the least transparent and predictable of the world's major markets for agricultural products, largely because of uneven enforcement of regulations and selective intervention in the market by China's regulatory authorities. Seemingly capricious practices by Chinese customs and quarantine agencies delay or halt shipments of agricultural products into China. Sanitary and phytosanitary (SPS) measures with questionable scientific bases or a generally opaque regulatory regime frequently have created difficulties and uncertainty for traders in agricultural commodities, who require as much certainty and transparency as possible." ("2017 National Trade Estimate Report On Foreign Trade Barriers," Office Of The United States Trade Representative , March 2017, pg. 91)

Market Access For U.S. Food Exports Promised As A Result Of The WTO Accession Agreement Has Yet To Be Fully Realized. "With China moving forward with implementation of its 2015 Food Safety Law, new regulations - and new concerns such as burdensome and unnecessary requirements for official certification of low-risk food exports - are on the increase. In addition, market access promised through the TRQ system set up pursuant to China's WTO accession agreement still has yet to be fully realized." ("2017 National Trade Estimate Report On Foreign Trade Barriers," Office Of The United States Trade Representative , March 2017, pg. 91)

Despite The Clearance Of U.S. Products Under International Guidelines, China Has Blocked The Importation Of U.S. Beef And Poultry For "Questionable," "Unwarranted," And "Unscientific" Reasons. "In 2016, beef, poultry and pork products were affected by questionable SPS measures implemented by China's regulatory authorities. For example, China continued to block the importation of U.S. beef and beef products, more than nine years after these products had been declared safe to trade under international scientific guidelines established by the World Organization for Animal Health (known by its historical acronym OIE), and despite the further fact that in 2013 the United States received the lowest risk status from the OIE, i.e., negligible risk. China also continued to impose an unwarranted and unscientific Avian Influenza-related import suspension on U.S. poultry due to an outbreak of high-pathogenic Avian Influenza (AI), which has now been eliminated in the United States." ("2017 National Trade Estimate Report On Foreign Trade Barriers," Office Of The United States Trade Representative , March 2017, pg. 92)

Reports Have Indicated China May Be "Substantially Exceeding" WTO Standards For Financial Support Of Its Domestic Agriculture

In 2017, Reports By U.S. Farm Groups Concluded China "May Be Substantially Exceeding" WTO Standards For Domestic Support Of Its Agricultural Industry. "The United States has remained concerned that the methodologies used by China to calculate support levels, particularly with regard to its price support policies and direct payments, result in underestimates. Certain U.S. farm groups have commissioned reports to calculate support levels for certain commodities, including corn, wheat and soybeans, and these reports have concluded that China may be substantially exceeding its WTO-agreed domestic support spending limits." ("2017 National Trade Estimate Report On Foreign Trade Barriers," Office Of The United States Trade Representative , March 2017, pg. 92)

The USTR In 2017 Concluded China Had Been Steadily Increasing Domestic Support For Key Agricultural Commodities. "At the same time, China has been steadily increasing domestic support for key commodities, and reports commissioned by certain U.S. farm groups have concluded that China may be exceeding its WTO limits." ("2017 National Trade Estimate Report On Foreign Trade Barriers," Office Of The United States Trade Representative , March 2017, pg. 91)

USTR: "For Several Years, China Has Been Significantly Increasing Domestic Subsidies" And Used Other Support Measures For Domestic Agricultural Sectors. "For several years, China has been significantly increasing domestic subsidies and other support measures for its agricultural sector. China has established a direct payment program, instituted minimum support prices for basic commodities and sharply increased input subsidies." ("2017 National Trade Estimate Report On Foreign Trade Barriers," Office Of The United States Trade Representative , March 2017, pg. 92)

UNFAIR CHINESE TRADE PRACTICES HAVE HURT THE U.S. AUTO INDUSTRY

Stringent Chinese Auto Tariffs Have Disadvantaged Foreign Car Imports Making Them Extremely Expensive

In 2017, China's Tariff On Imported Cars Was 25% Of The Wholesale Price In Contrast To The United States Tariff Of 2.5%. "China's tariff on imported cars is 25 percent of the wholesale price, which is one reason General Motors, Ford and Volkswagen set up huge factories in China. By contrast, tariffs in the United States are just 2.5 percent for imported cars, minivans and sport utility vehicles. So automakers make in China almost all the cars that they sell there, while many cars in the United States are imported." (Keith Bradsher and Karl Russell, "Building Trade Walls," The New York Times , 03/07/17)

  • China Also Imposes A Special Tax On Cars And SUVs With Large Engines. "The United States' success exporting autos to China has come in the face of substantial barriers at the border, notably China's 25 percent auto tariff. China also imposes a special tax on cars and SUVs with large engines, which tends to fall on imports (a luxury tax is imminently reasonable by the way; it only arouses suspicion because of the relative absence of domestic Chinese production in this segment)." (Brad W. Setser, "Auto Trade With China," Council On Foreign Relations , 04/03/17)

Consequently, Auto Imports Have Struggled To Gain A Substantial Market Share, And Were Less Than 5% Of Sales Within China's Total Auto Market In 2017. "Imports never have been that large relative to China's total auto market (imports are less than 5 percent of sales, according to Keith Bradsher and Karl Russell of the New York Times). The growth came from booming demand, especially at the top end of the market." (Brad W. Setser, "Auto Trade With China," Council On Foreign Relations , 04/03/17)

A Jeep Wrangler Manufactured In America Is Almost Double The Price In China Because Of The Taxes That The Government Charges On Every Car Manufactured In Another Country. "Manufactured in Toledo, Ohio, the Wrangler is a descendant of the jeeps that were used by American forces in World War II. Equipped with a 3.6-liter engine and a five-speed automatic transmission, the Rubicon edition of the Wrangler has a suggested retail price of $40,530 in the United States. But in China, the same vehicle would set a buyer back by a hefty $71,000, mostly because of taxes that Beijing charges on every car, minivan and sport utility vehicle that is made in another country and brought to China's shores." (Keith Bradsher, "China's Taxes On Imported Cars Feed Trade Tensions With U.S.," The New York Times , 03/20/17)

U.S. Auto Companies Hoping To Manufacture Within China Are Required By Chinese Law To Form Joint Ventures With Chinese Companies Which Have Limited Opportunities And Market Access

U.S. Automakers Who Build In China Are Required By Law To Form Joint Ventures With Chinese Companies, And Those Companies Must Own 50% Or More Of The Venture. "When U.S. automakers like GM build in China, they are required by law to form joint ventures with Chinese companies. Those Chinese companies must own 50% or more of the venture." (Jonathan Swan, "Car Wars: Trump Plans Auto Fight With China," Axios , 05/19/17)

Most Vehicles Sold In China Are Built There And Major U.S. Automakers Have Had To Establish Joint Ventures With Chinese Automakers. "But most vehicles sold in China are built there. GM, Ford and other automakers have already established joint ventures with Chinese automakers to manufacture vehicles there, as required by law." (Nathan Bome and Phoebe Wall Howard, "Chinese Auto Tariff Concessions? U.S. Auto Industry Could Benefit," USA Today , 04/10/18)

The United States Chamber Of Commerce Reported The Way These Chinese Joint Venture Requirements And Foreign Equity Restrictions Block Opportunities For Foreign Auto Manufacturing Companies To Operate In The Chinese Market. "Current restrictions impact half of the priority industries in MIC 2025. Auto manufacturing, civil aviation, telecommunications, ship building, and railway equipment all have foreign equity restrictions or joint venture requirements. These restrictions either block opportunities for foreign companies to operate in the mark, or, in some cases, create a de facto technology transfer requirement to the Chinese partner as a pre-condition for market access." ("Made In China 2025: Global Ambitions Built On Local Protections," United States Chamber of Commerce , 03/16/17, p.25)

Tesla CEO Elon Musk Has Compared The Obstacles Faced By The US Auto Industry In China To "Competing In An Olympic Race Wearing Lead Shoes." ("Elon Musk Says Trump's Import Tariffs Like an Olympic Race Wearing Lead Shoes," Reuters , 3/9/18)

CHINA HAS BLOCKED U.S. WEBSITES IN FAVOR OF DOMESTIC COMPETITORS

Unfair Chinese Regulatory Practices Pose A Threat To U.S. Technology Companies

In A March 2017 Report, USTR Found That U.S. Companies Are Being Harmed By Countries Blocking Or Restricting The Flow Of Digital Data And Services. "Other countries have looked to harm U.S. companies by blocking or unreasonably restricting the flow of digital data and services, or through theft of trade secrets ("The President's 2017 Trade Policy Agenda," The Office Of The United States Trade Representative , 3/17, pg. 4)

Many American Technology Companies Have "Struggled" In China, For Example Facebook And Google Are Both Banned By The Chinese Censorship Regime. "Many American technology firms have struggled in China. Facebook and Google are both banned under the censorship regime in the world's second-largest economy." (Arjun Kharpal, "US Tech Firms Should Keep Trying To Crack China, Trade Body Says," CNBC , 6/6/17)

The Washington Post Reported That Barriers To The Free Flow Of Data Erected By China And Others Threaten $400 Billion Of Annual U.S. Exports. "China, Russia, the European Union and other nations are erecting barriers to the free flow of data that companies increasingly sell as a product or use as a tool. Those obstacles threaten roughly $400 billion of annual U.S. exports and the bottom line of companies like IBM, Citibank, Federal Express and Visa." (David Lynch, "The U.S. Dominates The World Of Big Data. But Trump's NAFTA Demands Could Pat That At Risk," The Washington Post , 11/28/17)

China Has Raised Barriers To The Free Flow Of Data, Blocking U.S. Websites And Instead Promoting Domestic Competitors

In 2016 The Chinese Government Adopted A Law That Requires Technology Products Supplied To The Chinese Government And Critical Industries To Be Reviewed By A Committee, Potentially Giving Local Companies A Competitive Edge. "The law, adopted late last year, sets up a committee to conduct security reviews of technology products supplied to the Chinese government and critical industries. Its requirements on matters such as technology disclosure and encryption could give local companies a competitive edge, the groups said in a letter reviewed by The Wall Street Journal." (Eva Dou, "Global Tech Companies Call On China To Delay Cybersecurity Law," The Wall Street Journal , 5/15/17)

  • Though China's Internet Regulator Maintains The Rules Are Nondiscriminatory, The Vague Wording Could Hand Regulators "Broad Powers To Block A Technology Company's Products." "China's internet regulator couldn't be immediately reached for comment. In the past, it has maintained the rules are neutral and nondiscriminatory. Some of the law's provisions were softened after they drew criticism from western trade groups and governments. Wording requiring companies to submit 'source code' to prove their products are secure was removed in the final version of the law. Critics say the law's vague wording still hands Chinese regulators broad powers to block a technology company's products." (Eva Dou, "Global Tech Companies Call On China To Delay Cybersecurity Law," The Wall Street Journal , 5/15/17)

A Report By The USTR Said That China Hoped To "Replace Foreign Information And Communications Technology Products And Services With Locally Produced Versions" By Imposing Cybersecurity Restrictions. "The report said China also is using a series of cybersecurity restrictions as part of an apparent long-term goal to replace foreign information and communications technology products and services with locally produced versions." ("US Trade Barriers Report Slams China On Overcapacity, Tech Transfer," CNBC , 3/31/18)

Bloomberg Has Reported That China Has Excluded Thousands Of U.S. Websites Domestically, Including Eight Of The Twenty-Five Most Trafficked Global Sites. "Last year, China excluded thousands of U.S. websites from China, including eight of the 25 most-trafficked global sites. Yet, so far at least, there's been hardly a word of protest out of Washington against these systematic denials of market access." (Adam Minter, "The Great Firewall Is A Trade Barrier," Bloomberg , 03/26/17)

This Protectionism Has Allowed For Domestic Companies To Flourish In The Absence Of Foreign Competition. "The Chinese government is doubtless aware of the opportunities that online protectionism creates for domestic companies. In June 2009, China blocked Twitter; two months later, Sina Corp. launched a wildly successful knock-off microblog, Weibo, that has thrived for years in the absence of foreign competition. Likewise, when Google announced in May 2010 that it was contemplating the total shutdown of its Chinese offices, the stock of Baidu Inc. -- its leading Chinese competitor and a keen observer and imitator of Google's business -- rallied 16.6 percent in a single day, while smaller rivals enjoyed similar bumps." (Adam Minter, "The Great Firewall Is A Trade Barrier," Bloomberg , 03/26/17)


Previous post

Optimism And Praise For Pompeo’s Nomination Is Rolling In

Next post

Support Pompeo, Not Partisanship
Republican National Committee

Connect With Us

Republican National Committee
Chairwoman Ronna McDaniel
News & Videos
  • 310 First Street SE, Washington, DC 20003
  • 202-863-8500

By providing your phone number, you are consenting to receive calls and SMS/MMS msgs, including autodialed and automated calls and texts, to that number from the Republican National Committee. Msg&data rates may apply. Terms & conditions/privacy policy apply 80810-info.com.

Paid for by the Republican National Committee. Not Authorized By Any Candidate Or Candidate's Committee. www.gop.com

By providing your phone number, you are consenting to receive calls and SMS/MMS msgs, including autodialed and automated calls and texts, to that number from the Republican National Committee. Msg&data rates may apply. Terms & conditions/privacy policy apply 80810-info.com.

Paid for by the Republican National Committee.
Not Authorized By Any Candidate Or Candidate's Committee. www.gop.com