“The Commerce Department’s role and responsibilities have grown in size and complexity, while its capabilities and resources have not. This shift reflects the nature of the competition with China (and one of the reasons the analogy to a “new Cold War” is flawed): Economic security and advantages in non-military technology have outsize importance compared to traditional military strength. That’s still crucial, of course, but much of the day-to-day contest happens in the arena of commerce. Just as other departments, like Treasury and Homeland Security, have been revamped and restructured as their relevance to national security grew, the Biden administration needs to reform the Commerce Department’s resources, structure and authorities if its China strategy is to succeed.”
“At the core of former President Donald Trump’s aggressive trade policies was a relatively simple—perhaps overly simplified—promise: Tariffs on Chinese-made products would drive manufacturers out of China.
“Many tariffed companies will be leaving China for Vietnam and other such countries in Asia,” Trump claimed in May 2019, about a year after his tariffs were first imposed. “China wants to make a deal so badly. Thousands of companies are leaving because of the Tariffs,” he tweeted a few months later, suggesting that the outflow was already underway. “If you want certainty, bring your plants back to America,” Robert Lighthizer, Trump’s U.S. trade representative, lightly threatened in a New York Times op-ed in May 2020, as the trade war’s second anniversary arrived.
But the tariffs failed to achieve that primary policy aim, according to a new paper published by researchers at the University of Kansas and the University of California, Irvine. Roughly 11 percent of multinational companies exited China in 2019, the first full year in which tariffs were in place—a significant increase from previous years. But the overall number of multinational firms operating in China actually increased during that same year, as foreign investment continued to flow into China even as the trade war ratcheted up costs.
In fact, the number of U.S.-based multinationals in China actually increased from 16,141 in 2017 to 16,536 in 2019. Non-U.S. companies were more likely to exit China during 2019 despite not being subjected to Trump’s tariffs.
“We estimate that less than 1 percent of the increase in U.S. firm exits during this period was due to U.S. tariffs. And U.S. firms were no more likely to divest than firms from Europe or Asia,” researchers Jiakun Jack Zhang and Samantha Vortherms wrote in The Washington Post this week.”
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“Trump is no longer running U.S. trade policy, but his failed tariffs on Chinese imports are still in force. Lighthizer’s replacement in the Biden administration, U.S. Trade Representative Katherine Tai, has said the tariffs provide “leverage” over China.
But that perspective is no more grounded in reality than Trump’s promises that his tariffs would cause companies to flee China. American consumers are bearing nearly 93 percent of the costs of the tariffs applied to Chinese goods, according to a recent report from Moody’s Investors Service. How is this giving the White House leverage over China?”
“While Australia was pivoting to China, Beijing was orchestrating its own pivot: Xi had delivered a very different address to his countrymen before his speech to the Australian parliament.
In January 2013, shortly after becoming the chairman of the Communist Party and just months before becoming Chinese president, Xi laid out plans to make China a global superpower through economic and technological might.”
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“That meant going after the Western alliance —with Australia as the weakest link. So while publicly promising sincerity and trust, Xi secretly sought to squeeze the island nation.
First came the cyberattacks, with Chinese state-linked hackers going after the Australian parliament, the country’s Bureau of Meteorology, the Australian National University and numerous others.
Then came attacks on Australia’s Chinese-language media, with reports of coercion, bullying and intimidation at any outlet daring to depart from the Communist Party line.
Reports emerged that China had reached deep into the Australian political establishment, seeking to steer policy in China’s favor. Investigations found Beijing-linked businesses were the largest sources of donations with foreign ties, and the money went to both sides of the political spectrum.
The financial intrusions rattled Australian politics. In 2017, Australian Labor Party Senator Sam Dastyari was forced to resign over his ties to Chinese Communist Party-linked donors.”
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“Later in 2017, China’s security chief warned Labor leadership the party would risk losing support among Australia’s Chinese diaspora community if it didn’t back an extradition treaty Beijing wanted.
And over the past 18 months, China hit Australia with a series of trade restrictions and tariffs in response to Canberra’s call for an independent investigation into the origins of the coronavirus pandemic, which emerged from the Chinese city of Wuhan.
Meanwhile, China was also building its military might in the region, making sweeping claims to the South China Sea and squeezing Hong Kong and Taiwan — moving southward toward Australia.”
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“Australia, having once extended Beijing a hand of friendship, is now back in the arms of its old associates.
Earlier in September, Canberra announced a wide-ranging security partnership with the U.S. and U.K. The pact, dubbed AUKUS, comes amid a broader Australian attempt to pivot its economy away from China.
“The level of Chinese economic coercion and cyber espionage against Australia was once unimaginable, so our security agencies have learned to consider worst-case possibilities,” said Rory Medcalf, head of the National Security College at the Australian National University and author of “Indo-Pacific Empire.”
AUKUS, he said, “is an alignment made in Beijing.”
Under the new Anglo-American alliance, the U.S., U.K. and Australia have agreed to share advanced technologies with one another, including artificial intelligence, cybersecurity, quantum computing, underwater systems and long-range strike capabilities. Australia also abandoned a submarine deal with France worth more than €50 billion to acquire American nuclear-powered submarines instead.
“It’s a remarkable collapse in Australia-China relations and a massive deterioration in Australia’s security outlook that’s led to this outcome,” said Michael Shoebridge, a director at the influential Australian Strategic Policy Institute (ASPI) think tank, which receives funding from the Australian and other governments.”
“lays the groundwork for Australia to acquire at least eight nuclear submarines with support from the US and the UK. Australian Prime Minister Scott Morrison said it also marks the “first major initiative” of a tripartite new security agreement among the countries under the acronym AUKUS (pronounced AWK-us, according to the AP).
“This initiative is about making sure that each of us has a modern capability — the most modern capabilities we need — to maneuver and defend against rapidly evolving threats,” President Joe Biden said in Wednesday’s joint announcement with Morrison and British Prime Minister Boris Johnson.
The AUKUS submarine deal replaces a previous agreement between France and Australia for France to deliver 12 non-nuclear submarines.”
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“In public remarks..French officials, including Le Drian, have not held back their shock at Australia’s decision to turn to the US and the UK. “We had established a trusting relationship with Australia, and this trust was betrayed,” Le Drian said on Thursday, according to Politico.”
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“French President Emmanuel Macron’s decision to withdraw his country’s ambassadors to the US and Australia in response to the pact marks a surprising breakdown in France’s historically close relationship with the US — but Australia’s decision to look to the US for its submarine fleet is less surprising.
Specifically, China’s military buildup, and its quest for dominance in the South China Sea — a major trade route for Australia — made the French submarines obsolete before they were even delivered. Because the US-made submarines rely on nuclear power, they have a far greater range than conventional submarines, don’t require refueling, and have better stealth capabilities — meaning they can stay underwater for months at a time without being detected, Australian National University researcher AJ Mitchell explained in the Conversation this week.”
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“In addition to the advantages of nuclear submarines, Australia’s previous deal with France — a $66 billion submarine contract, finalized in 2016, that would have provided Australia with 12 conventional, diesel-powered Barracuda submarines — has been rife with difficulties.”
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“On top of cost overruns and delays, there were other issues as well. Shortly after Australia and France reached the agreement in 2016, the French shipbuilder, then called DCNS, revealed it had been hacked and documents related to a separate Indian submarine project exposed. And while France’s submarine technology — conventional, diesel-powered attack vessels that could be switched to nuclear power — may have made sense when Australia’s relationship with China was less contentious, that relationship has soured recently due to China’s aggressive foreign policy in the Pacific and elsewhere.”
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“Australia and the US reportedly conspired to keep the developing deal from France, even as officials from both countries met with their French counterparts. Biden discussed the future of their alliance with Macron in June, and Secretary of State Antony Blinken made no mention of the pact when he met with Le Drian that same month in Paris.
Australia also hid its plans from France when Morrison and Macron met in June, although Morrison says he did raise concerns about the viability of diesel-powered vessels, according to the Hill. Australia’s defense and foreign ministers even met with their French counterparts late last month and issued a joint statement about furthering their defense cooperation, specifically citing the submarine program.”
“the Chinese equivalent of TikTok, a short-form video app called Douyin with 490 million users, announced a 40 minutes-a-day restriction for its users under the age of 14. The gaming industry was similarly impacted by a sweeping crackdown on youth video game playing, which became restricted to one hour a day on weekends and public holidays. “Sissy idols” and “effeminate men” are now banned from the media. And more traditional censorship is still going strong, with China refusing to allow Marvel’s blockbuster film “Shang-Chi and the Legend of the Ten Rings” to open in its theaters.”
“An Islamic State suicide bomber struck at a mosque packed with Shiite Muslim worshippers in northern Afghanistan on Friday, killing at least 46 people and wounding dozens in the latest security challenge to the Taliban as they transition from insurgency to governance.
In its claim of responsibility, the region’s IS affiliate identified the bomber as a Uygher Muslim, saying the attack targeted both Shiites and the Taliban for their purported willingness to expel Uyghers to meet demands from China. The statement was carried by the IS-linked Aamaq news agency.
The blast tore through a crowded mosque in the city of Kunduz during Friday noon prayers, the highlight of the Muslim religious week. It was the latest in a series of IS bombings and shootings that have targeted Afghanistan’s new Taliban rulers, as well as religious institutions and minority Shiites since U.S. and NATO troops left in August.”
“China’s government banned effeminate men on TV and told broadcasters..to promote “revolutionary culture,” broadening a campaign to tighten control over business and society and enforce official morality.
President Xi Jinping has called for a “national rejuvenation,” with tighter Communist Party control of business, education, culture and religion. Companies and the public are under increasing pressure to align with its vision for a more powerful China and healthier society.
The party has reduced children’s access to online games and is trying to discourage what it sees as unhealthy attention to celebrities.
Broadcasters must “resolutely put an end to sissy men and other abnormal esthetics,” the TV regulator said, using an insulting slang term for effeminate men — “niang pao,” or literally, “girlie guns.””
“Beijing has just delivered a blow to the gaming industry, and a blow to Chinese children’s freedoms. Starting September 1, minors in China will be allowed to play video games (including those played on mobile devices) only from 8 p.m. to 9 p.m. on Fridays, Saturdays, Sundays, and holidays. So: one hour per day, with a cap of three hours per week.
Former regulations had less restrictive caps, allowing an hour and a half of gaming per day with up to three hours allowed on holidays (for a total of 13.5 hours per week). It’s unclear how these new restrictions apply to console gaming, or whether parents could feasibly override these rules by allowing kids to use an adult’s gaming account. (Other workarounds, such as VPNs, could also potentially work.)
The regulations—which require that people use their real names to register, instead of using anonymous accounts—state that they aim “to resolutely prevent minors from becoming addicted to video games, and to effectively protect their physical and psychological health.” This will allegedly “lead minors to form positive habits in the use of the internet.””
“The bureaucratic process established by the Trump administration to determine which American companies should be exempted from paying tariffs on imports from China is a black box of “inconsistencies” and poorly documented decision-making, according to a new audit.
In a report published last week, the Government Accountability Office (GAO) cast a critical eye on the so-called “tariff exclusion process” created in 2018 as part of the Trump administration’s efforts to slap tariffs on a wide range of imports from China. The process, overseen by the Office of the U.S. Trade Representative, allowed American businesses to appeal to the federal government for permission to not pay tariffs if they could demonstrate that a given product was not available from other sources, or if a business faced “severe economic harm” due to the tariffs.
Between 2018 and 2020, American businesses submitted more than 53,000 exclusion requests. The vast majority—87 percent—were denied, and most of the denials were on the grounds that the company failed to demonstrate sufficient economic harm to the Office of the U.S. Trade Representative, the GAO found.
In other words, federal bureaucrats reviewed tens of thousands of statements from companies pointing out how the Trump administration’s tariffs would cause economic harm—because, yes, Americans paid for the tariffs—then discarded most of those requests because the harms were not “severe” enough.
What’s even worse is that there’s very little in the way of objectivity or due process afforded to companies that had their exclusion requests denied. Soon after the tariffs were imposed, members of Congress warned that the exclusion process lacked “basic due process and procedural fairness” and that it could be “abused for anticompetitive purposes.” As Reason previously reported, business owners have complained that simply getting a decision one way or the other can take months. And there is no way to appeal the rulings.
The new GAO report confirms some of those concerns.”
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“tariffs are always about protecting certain industries, and protecting certain industries always invites influence-peddling.”