Pentagon Report: A Comprehensive Response Needed to Counter Chinese Economic Rise

Matthew McMullan

Matthew McMullan Communications Manager, Alliance for American Manufacturing

President Trump is really opening it up on China. His administration announced $50 billion in tariffs targeted at industries the U.S. government argues have unfairly advanced with the help of stolen American intellectual property (and then he threatened an extra $100 billion after China responded with politically targeted tariffs of its own).

This all followed the administration’s Section 232 investigations into steel and aluminum imports that resulted in significant tariffs on those metals. After exemptions to key trading partners were handed out, these tariffs are widely regarded to target China.

There has been significant criticism of the way all this stuff has been announced – some, like representatives of the agriculture industry, even feigned surprise it rolled out all – and the overall strategy hasn't been crystal clear. But it's certainly clear that Washington, Trump’s China-focused tariffs or not, now considers economic competition with China a big deal.

Case in point: A Pentagon white paper urging a comprehensive government response to counter Beijing’s own long-term plans. The report’s authors downplayed its role in the Trump tariff debate in an interview with Defense One, but the paper has been read among key lawmakers on Capitol Hill. One senator even cited it while arguing for new legislation “to allow the Committee on Foreign Investment in the United States, or CFIUS, to restrict Chinese investment into U.S. tech companies, particularly startups,” Defense One noted.

Among the report’s main findings:

  • China is executing a multi-decade plan to transfer technology to increase the size and value-add of its economy, currently the world’s 2nd largest. By 2050, China may be 150 percent the size of the United States.
     
  • China is investing in the critical future technologies that will be foundational for future innovations both for commercial and military applications: artificial intelligence, robotics, autonomous vehicles, augmented and virtual reality, financial technology and gene editing. The line demarcating products designed for commercial vs. military purposes is blurring with these new technologies.
     
  • The U.S. does not have a comprehensive policy or the tools to address this massive technology transfer to China.
     
  • The U.S. government does not have a holistic view of how fast this technology transfer is occurring, the level of Chinese investment in U.S. technology, or what technologies we should be protecting.

These are enormous problems to fix. Michael Brown, one of the paper’s authors, told Defense One an effective response would itself need to be huge:

“The Chinese government benefits from its State control to direct combined resources of business, government and academia. China pulls all of these sectors together to make significant advances in science and technology. Since we’re in a technology race with China, the U.S. needs to be much more proactive in both making a larger investment in science and technology as well as calling for ‘moonshots’ to bring together business, government and academia to achieve specified national innovation priorities ... The real answer here is we have to make a much bigger investment. One of the things we could do is set some national innovation priorities…we’ve got to recognize that one of our adversaries is doing that frequently.”

Defense One went on to note that the budget for military research and development is up, but (just as important) for science research elsewhere is not, and that “massive and growing budget deficits portend a dim future for robust research and development spending.”

Read the very interesting Defense One writeup here, and find a copy of the Pentagon report here.

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Reposted from AAM

Posted In: Allied Approaches, From Alliance for American Manufacturing

Union Matters

Federal Minimum Wage Reaches Disappointing Milestone

By Kathleen Mackey
USW Intern

A disgraceful milestone occurred last Sunday, June 16.

That date officially marked the longest period that the United States has gone without increasing federal the minimum wage.

That means Congress has denied raises for a decade to 1.8 million American workers, that is, those workers who earn $7.25 an hour or less. These 1.8 million Americans have watched in frustration as Congress not only denied them wages increases, but used their tax dollars to raise Congressional pay. They continued to watch in disappointment as the Trump administration failed to keep its promise that the 2017 tax cut law would increase every worker’s pay by $4,000 per year.

More than 12 years ago, in May 2007, Congress passed legislation to raise the minimum wage to $7.25 per hour. It took effect two years later. Congress has failed to act since then, so it has, in effect, now imposed a decade-long wage freeze on the nation’s lowest income workers.

To combat this unjust situation, minimum wage workers could rally and call their lawmakers to demand action, but they’re typically working more than one job just to get by, so few have the energy or patience.

The Economic Policy Institute points out in a recent report on the federal minimum wage that as the cost of living rose over the past 10 years, Congress’ inaction cut the take-home pay of working families.  

At the current dismal rate, full-time workers receiving minimum wage earn $15,080 a year. It was virtually impossible to scrape by on $15,080 a decade ago, let alone support a family. But with the cost of living having risen 18% over that time, the situation now is far worse for the working poor. The current federal minimum wage is not a living wage. And no full-time worker should live in poverty.

While ignoring the needs of low-income workers, members of Congress, who taxpayers pay at least $174,000 a year, are scheduled to receive an automatic $4,500 cost-of-living raise this year. Congress increased its own pay from $169,300 to $174,000 in 2009, in the middle of the Great Recession when low income people across the country were out of work and losing their homes. While Congress has frozen its own pay since then, that’s little consolation to minimum wage workers who take home less than a tenth of Congressional salaries.

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