Wilbur Ross and Trump bark at China but don’t yet bite – China’s latest top news

Jeremy Goldkorn’s selection of the top stories from China on August 14, 2017. Part of the daily SupChina newsletter, a convenient package of China’s business, political, and cultural news delivered to your inbox for free. Subscribe here.

Trade wars and chicken feet

Trump signs memo to launch investigation — no action yet

On August 14, Donald Trump signed a memorandum that the Washington Post says will “likely trigger an investigation into China’s alleged theft of U.S. intellectual property,” which the U.S. president said “costs our nation millions of jobs and billions and billions of dollars each and every year.”

As per his custom, Trump held up his signed memorandum for the cameras (see GIF above), but as Politico noted in April, “the president knows how to stage a photo op, but so far his signature hasn’t changed much.” Nonetheless, this memorandum presages uncomfortable times ahead for U.S.-China trade negotiators:

  • Timed to coincide with the memorandum signing, the Financial Times published an op-ed (paywall) by U.S. Secretary of Commerce Wilbur Ross titled “American genius is under attack from China,” which uses Trump’s talking points and warns of “the deeper danger posed by the manner in which Chinese companies and the Chinese government treat America’s intellectual property.”
  • The memorandum does not order an investigation; it directs U.S. Trade Representative Robert E. Lighthizer to determine whether to launch an investigation. The Washington Post (link above) says “the inquiry would give the president broad authority to retaliate if it finds that China is compromising U.S. intellectual property.”
  • The New York Times notes (paywall) that the move comes at the same time as Trump continues to seek help from China on North Korea, and in a separate article (paywall) that Trump’s memorandum is “cautious” as it includes an “intermediate step of requesting an investigation, rather than starting one immediately.”
  • Bloomberg says that Trump is finding it “harder than it sounds” to tackle China on trade as “deep trade links mean that bold sanctions risk backfiring and targeted ones may end up yielding little.”
  • Writing for the Brookings Institute, David Dollar and Ryan Hass argue that Trump lost his best tool for improving U.S. results from trade with China when he shredded the Trans-Pacific Partnership, and that there is a real risk of a trade war if his administration takes an uncompromising position.

Will China take over global tech?

One of the anxieties motivating U.S. trade negotiators is that China will begin to dominate key technology sectors because of rapid progress — possibly made with the benefit of American intellectual property:

  • The New York Times says (paywall) that China’s “effort to take a lead in the technologies of the future” such as robotics and microchip manufacturing are often made “with the help of foreign companies” and will be a subject of Trump’s intended investigation.
  • For the Council on Foreign Relations, Lorand Laskai looks at Beijing’s plans to become a global leader of artificial intelligence (AI) using “old-school central planning with a futuristic twist.”
  • At Macro Polo, Evan Feigenbaum examines the “deep roots and long branches of Chinese techno-nationalism.”

Chicken feet and sweet spots

Some lighter news in U.S.-China trade:

  • The Financial Times notes (paywall) that “China’s love of U.S. chicken feet proves a recipe for a perfect trade” as “Americans eat about 9 billion chickens a year, but not the feet,” whereas China imports about 300,000 tonnes of chicken feet annually. However, it was only this year that the trade began to work, “thanks to a small item included in the ‘early harvest’ of deals announced by the Trump administration this spring.”
  • Reuters reports that “many major U.S. companies have reported stronger second-quarter earnings and revenue from their Chinese operations in recent weeks,” including construction equipment manufacturer Caterpillar, chipmaker Skywork Solutions, and Starbucks.