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

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