The Foreign Service Journal, July-August 2022

THE FOREIGN SERVICE JOURNAL | JULY-AUGUST 2022 27 and substantial government, financial and other support to the targeted Chinese industries,” as well as “foreign technology acquisition through various means.” In an August 2020 “In Focus” update, the U.S. Congressional Research Service reported that “Chinese government guidance funds (GGFs) channel state funding to Chinese companies in support of domestic R&D and overseas acquisitions,” and “as of March 2018, an estimated 1,800 GGFs linked to MIC 2025 were collectively valued at $426 billion.” CRS stated: “GGFs target and fund strategic acquisitions that appear to build Chinese capa- bilities through control of foreign corporate expertise, IP, talent pools, and ties to suppliers and customers.” Based on these assessments and after numerous rounds of negotiations, the United States finally took action to raise tariffs on more than $350 billion of Chinese imports in different tranches. It took steps to mandate a national security review of Chinese investments in 27 “critical technology” industries and tightened scrutiny of Chinese business operations in the United States. But the question remains: Why had the United States not responded earlier to China’s egregiously unfair trade practices, as Zoellick suggested we might, and why do many continue to oppose current and future measures? One answer is provided in the USTR Section 301 report: “U.S. companies have stated for more than a decade, they fear that they will face retaliation or the loss of business opportunities if they come forward to complain about China’s unfair trade practices.” Moreover, American companies have lobbied against and sought exclusions from the recent tariff measures applied on Chinese imports that affect their business operations. Beijing has long recognized the important role of the private sector inWestern democracies and has not hesitated to use its leverage to pressure the United States from taking action not only against China’s trade practices but on political and security issues, as well. Inmy experience in China, we came to expect visits from U.S. businesses under pressure from the Chinese government whenever bilateral tensions escalated, and this has now been extended to individuals and businesses in the United States. We have also seen such pressures applied by Beijing against other countries, as in the cases of Australia (over investigation of the origins of COVID-19) or Korea (over deployment of U.S. missile defense systems). Hence, while we had hoped that increased global interdependence would encourage China to bemore responsible, it appears, on the contrary, to have primarily increased Beijing’s lever- age against the rest of the world. At the same time, while Beijing has been open to dialogues and negotiations, we have few results to show for them. I recall that a PRC Foreign Ministry official remarked at the end of my last tour in Beijing that China and the United States had con- ducted more than 90 annual dialogues by 2013 across a full spec- trum of subjects from trade and security to labor, law enforce- ment and human rights. On occasion, “successful” talks have led to “commitments” and “agreements”—but, as we used to advise American companies, the real negotia- tion begins after contracts are signed. Our bilateral history is replete with such examples, going back to the 1996 Sino- U.S. Intellectual Property Agreement and the recent “historic and enforceable” U.S.-China Phase One Trade Agreement. Beijing has been skillful in using dialogues and agreements—as well as the WTO—to delay and divert retaliatory actions by other parties, while China continues its policies and practices. Finally, Beijing has continually used cooperation on “com- mon interests,” such as climate change and nuclear nonprolif- eration (North Korea and Iran), as leverage to exact concessions from the United States on bilateral issues. As China’s Foreign Minister Wang Yi openly told U.S. Special Presidential Envoy for Climate John Kerry in September 2021: “Cooperation on climate change cannot be divorced from the overall situation of China- U.S. relations. The United States should work with China to meet each other halfway and take positive actions to bring China-U.S. relations back on track.” He urged the United States to “stop viewing China as a threat and rival, and cease containing and But the question remains: Why had the United States not responded earlier to China’s egregiously unfair trade practices? Made in China 2025 is a long-term PRC plan to boost China’s international competitiveness. WWW.GOV.CN