SOME WORRISOME CHINESE INTERNATIONAL TRADE STRATEGIES

State-Owned Enterprises (SOE): China owns and subsidizes many companies, as in the steel industry. Through the subsidized companies, China can target a market with low-cost products, capture market share and drive competitors out of business.

Technology Theft: China knows that technology and innovation is what can make them the  No. 1 manufacturer in the world, and they are prepared to get it any way they can. They have been accused of using espionage, counterfeiting and buying American technology companies as standard strategies. According to the U.S.-China Economic Panel Security Commission’s 2015 report to Congress “China’s government conducts and sponsors a massive cyber espionage operation aimed at stealing trade secrets and intelligence from U.S. corporations and the government.” This includes blocking U.S. company websites, revoking business licenses and censoring the internet.

Technology Transfer: As a condition of accessing the Chinese markets, China requires U.S. companies that build plants in China to create joint ventures with local companies and share with them their latest technologies. As a result the U.S. is slowly losing the Advanced Technology Products industries to China. Advanced technology products includes the more advanced elements of the computer and electronics industry as well as life sciences, biotechnology, aerospace and nuclear technology, all of which are central to U.S.'s own innovation strategy. In 2014, the U.S. trade deficit with China in advanced technology products was $123 billion.

Research & Development Facilities:  China requires foreign companies with plants in China set up R&D facilities in China. As a result, foreign companies have built more than 1,000 R&D labs in China.

Subsidies: Chinese exporters receive subsidies for constructing plants, purchasing equipment, reimbursement of start up losses and training personnel, etc. Local and national Chinese governments create new companies to start or expand new industries. Examples are wind power, lithium batteries for electric cars, LED lighting, new flat panel screens for TV, iPads, cell phones, etc. The national government frequently enlists provincial governments and banks to arrange the financing, acquisition of land, buildings and equipment, management, etc. for these new enterprises. China does practice this extensively and does not consider it an unfair trade practice.

Quality Control: China also has not established controls over the quality and safety of products, medicines, foods, etc. Its manufacturers therefore do not incur the costs of complying with such safety and quality rules and regulations. As a result, for more than a decade, the U.S. and other countries have received contaminated milk, drugs, toothpaste, food, toxic toys and other items. The Chinese people themselves are now protesting the poor and unsafe products being sold domestically. By not taking the necessary actions to establish regulations and inspections to insure the safety and quality of its products China has caused the illness and deaths of hundreds of thousands of people at home and abroad. This represents another area of unfair trade practices.