The Foreign Service Journal, July-August 2022

26 JULY-AUGUST 2022 | THE FOREIGN SERVICE JOURNAL “Our policy has succeeded remarkably well in expanding China’s international role,” then–Deputy Secretary of State (and former U.S. Trade Repre- sentative) Bob Zoellick said in a speech in 2005. But noting an “unacceptable” $162 billion bilateral trade deficit with China, he added: “The U.S. business community, which in the 1990s saw China as a land of opportunity, now has a more mixed assess- ment. Smaller companies worry about Chinese competition, rampant piracy, counterfeiting and currency manipulation. Even larger U.S. businesses—once the backbone of support for eco- nomic engagement—are concerned that mercantilist Chinese policies will try to direct controlled markets instead of opening competitive markets.” Zoellick warned that China “cannot take its access to the U.S. market for granted” because “the United States will not be able to sustain an open international economic system—or domestic U.S. support for such a system—without greater cooperation from China.” Said Zoellick: “As a responsible stakeholder, China would be more than just a member—it would work with us to sustain the international system that has enabled its success.” Now, nearly two decades later, there is little doubt that China has not become the “responsible stakeholder” Zoellick envisioned. To begin with, while not in itself an indicator of trade practices, the U.S. trade deficit with China reached $355.3 billion in 2021. More to the point, as reported in the 2018 USTR Section 301 report, the U.S. Intellectual Property Commission estimated that “Chinese theft of American IP currently costs between $225 billion and $600 billion annually.” The commis- sion found China to be “the worst infringer of American IP” and that “China effectuates forced technology transfer and theft including via industrial espionage, conditioning market access on technology transfer, tactical employment of vague regulations and laws to pressure U.S. firms into transferring their IP to avoid litigation and localization requirements that force U.S. firms to house sensitive data on the Chinese mainland.” The USTR report concluded: “The evidence adduced in this investigation establishes that China’s technology transfer regime continues, notwithstanding repeated bilateral commitments and govern- ment statements.” Even more troubling for the future, the USTR report explains that “China has issued a large number of industrial policies, including more than 100 five-year plans, science and technol- ogy development plans, and sectoral plans over the last decade” to attain global leadership in key strategic industries, including information technology, robotics, aircraft, energy and pharma- ceutical industries. The Made in China 2025 (MIC 2025) Plan, the report says, “sets forth clear principles, tasks and tools to implement this strategy, including government intervention Above: Tiananmen Square in 2016. Inset: Signboards for a protest in Hong Kong feature South China Sunday Morning Post coverage of the People’s Republic of China government crackdown on demonstrators on June 4, 1989, in Beijing’s Tiananmen Square. BRIANHARRIS/ALAMY