Decoding Trump’s Plan to Rein In China

Posted December 19, 2017 1:20 p.m. EST

BEIJING — It isn’t just about missiles and militaries anymore.

President Donald Trump’s national security blueprint released on Monday lumped economic challenges posed by the United States’ foreign rivals, particularly China, with the sort of traditional notions of national security that have long driven U.S. policy. Much of the document focused on brewing disputes between Beijing and Washington over emerging industries of the future — and who will control them.

Trade disputes between China and the United States are nothing new. But couched in the technical terminology and bureaucratic jargon is a fight over the new ideas that could shape industries and economies for decades to come.

Here’s how to read Trump’s national security plan, and what it means.

Intellectual Property Is King

For years, the United States battled China over pirated movies and counterfeit sneakers. Today, the stakes are bigger.

Businesses and Trump administration officials are expressing increasing concern about China’s efforts to buy up technologies and ideas abroad. China’s hope is to become largely self-sufficient in crucial technologies like semiconductors, artificial intelligence and electric cars, both to upgrade its economy and to free itself from technological dependence on the West. To get there, Beijing has unveiled its “Made in China 2025” program, an ambitious plan to foment homegrown firms that will compete with U.S. companies with the help of state support and cheap loans.

Some Western businesses complain that, to do business in China, they are required to form joint ventures with Chinese companies, or to otherwise share technology with Chinese partners who may someday become rivals. And the Pentagon has warned that China is taking stakes in innovative U.S. startups.

Deals Get a Closer Look

The Committee on Foreign Investment in the United States is a panel that reviews proposed deals between a U.S. company and a foreign buyer on the grounds of national security and makes recommendations to the president. But critics say the panel should extend its mandate and assess deals based on economic security concerns. In its annual report to Congress this year, for example, the U.S.-China Economic and Security Review Commission, a group created by Congress to monitor relations between the countries, said that Washington should block Chinese state-owned enterprises from acquiring U.S. companies.

One particular sector that has been in China’s sights is the semiconductor industry, a linchpin of Made in China 2025. For years, Chinese companies have tried and failed to buy stakes in or to acquire entire U.S. semiconductor companies, such as Fairchild Semiconductor, Micron Technology and Lattice Semiconductor. China has said that countries should not use security reviews to advance a protectionist agenda.

Watching Its Citizens

First unveiled a decade ago, China aims to roll out a nationwide social credit system by 2020 that aims to reward trustworthy individuals but put perceived miscreants on a blacklist. By giving each citizen a credit score based on a range of behaviors such as abiding by traffic laws and paying fines, the government aims to “create an honest and faithful society.” As part of the plan, which has been introduced in several cities, China’s top court maintains an online blacklist of people who are unable to pay their debts. People on the list are barred from taking flights, trains or making big purchases.

Human rights groups have criticized the system, saying it has been used unfairly on rights lawyers and investigative journalists and that the penalties are arbitrary.

Globalization 2.0

China’s “Belt and Road Initiative” is a central part of President Xi Jinping’s economic and geopolitical strategy to increase the country’s sway by building infrastructure projects such as railways and ports across Africa, Asia and Europe. Beijing has pledged to support $1 trillion in infrastructure projects that would span 60 countries. In so doing, Xi is trying to rewrite the global economic order — an adviser to the government called the plan “the new globalization 2.0” — drawing companies and countries into Beijing’s embrace.

The plan has left some countries increasingly concerned about becoming too dependent on China. The United States and many of its major Asian and European allies have taken a cautious approach to the project, wary of becoming too beholden to China’s strategic goals. Some, like Australia, have turned down Beijing’s overtures to sign up for the plan.