The USA’s War on Chinese Advanced Technology – By Prof. Jeffrey D. Sachs

November 12, 2019- By – By Prof. Jeffrey D. Sachs

NEW YORK – The worst foreign-policy decision by the United States of the last generation – and perhaps longer – was the “war of choice” that it launched in Iraq in 2003 for the stated purpose of eliminating weapons of mass destruction that did not, in fact, exist. Understanding the illogic behind that disastrous decision has never been more relevant, because it is being used to justify a similarly misguided US policy today.

The decision to invade Iraq followed the illogic of then-US Vice President Richard Cheney, who declared that even if the risk of WMDs falling into terrorist hands was tiny – say, 1% – we should act as if that scenario would certainly occur.     

Such reasoning is guaranteed to lead to wrong decisions more often than not. Yet the US and some of its allies are now using the Cheney Doctrine to attack Chinese technology. The US government argues that because we can’t know with certainty that Chinese technologies are safe, we should act as if they are certainly dangerous and bar them.

Proper decision-making applies probability estimates to alternative actions. A generation ago, US policymakers should have considered not only the (alleged) 1% risk of WMDs falling into terrorist hands, but also the 99% risk of a war based on flawed premises. By focusing only on the 1% risk, Cheney (and many others) distracted the public’s attention from the much greater likelihood that the Iraq War lacked justification and that it would gravely destabilize the Middle East and global politics.

The problem with the Cheney Doctrine is not only that it dictates taking actions predicated on small risks without considering the potentially very high costs. Politicians are tempted to whip up fears for ulterior purposes.

That is what US leaders are doing again: creating a panic over Chinese technology companies by raising, and exaggerating, tiny risks. The most pertinent case (but not the only one) is the US government attack on the wireless broadband company Huawei. The US is closing its markets to the company and trying hard to shut down its business around the world. As with Iraq, the US could end up creating a geopolitical disaster for no reason.

I have followed Huawei’s technological advances and work in developing countries, as I believe that 5G and other digital technologies offer a huge boost to ending poverty and other SDGs. I have similarly interacted with other telecoms companies and encouraged the industry to step up actions for the SDGs. When I wrote a short foreword (without compensation) for a Huawei report on the topic, and was criticized by foes of China, I asked top industry and government officials for evidence of wayward activities by Huawei. I heard repeatedly that Huawei behaves no differently than trusted industry leaders.

The US government nonetheless argues that Huawei’s 5G equipment could undermine global security. A “backdoor” in Huawei’s software or hardware, US officials claim, could enable the Chinese government to engage in surveillance around the world. After all, US officials note, China’s laws require Chinese companies to cooperate with the government for purposes of national security.

Now, the facts are these. Huawei’s 5G equipment is low cost and high quality, currently ahead of many competitors, and already rolling out. Its high performance results from years of substantial spending on research and development, scale economies, and learning by doing in the Chinese digital marketplace. Given the technology’s importance for their sustainable development, low-income economies around the world would be foolhardy to reject an early 5G rollout.

Yet, despite providing no evidence of backdoors, the US is telling the world to stay away from Huawei. The US claims are generic. As a US Federal Communications Commissioner put it, “The country that owns 5G will own innovations and set the standards for the rest of the world and that country is currently not likely to be the United States.” Other countries, most notably the United Kingdom, have found no backdoors in Huawei’s hardware and software. Even if backdoors were discovered later, they could almost surely be closed at that point.

The debate over Huawei rages in Germany, where the US government threatens to curtail intelligence cooperation unless the authorities exclude Huawei’s 5G technology. Perhaps as a result of the US pressure, Germany’s spy chief recently made a claim tantamount to the Cheney Doctrine: “Infrastructure is not a suitable area for a group that cannot be trusted fully.” He offered no evidence of specific misdeeds. Chancellor Angela Merkel, by contrast, is fighting behind the scenes to leave the market open for Huawei.

Ironically, though predictably, the US complaints partly reflect America’s own surveillance activities at home and abroad. Chinese equipment might make secret surveillance by the US government more difficult. But unwarranted surveillance by any government should be ended. Independent United Nations monitoring to curtail such activities should become part of the global telecoms system. In short, we should choose diplomacy and institutional safeguards, not a technology war.

The threat of US demands to blockade Huawei concerns more than the early rollout of the 5G network. The risks to the rules-based trading system are profound. Now that the US is no longer the world’s undisputed technology leader, US President Donald Trump and his advisers don’t want to compete according to a rules-based system. Their goal is to contain China’s technological rise. Their simultaneous attempt to neutralize the World Trade Organization by disabling its dispute settlement system shows the same disdain for global rules.

If the Trump administration “succeeds” in dividing the world into separate technology camps, the risks of future conflicts will multiply. The US championed open trade after World War II not only to boost global efficiency and expand markets for American technology, but also to reverse the collapse of international trade in the 1930s. That collapse stemmed in part from protectionist tariffs imposed by the US under the 1930 Smoot-Hawley Act, which amplified the Great Depression, in turn contributing to the rise of Hitler and, ultimately, the outbreak of World War II.

In international affairs, no less than in other domains, stoking fears and acting on them, rather than on the evidence, is the path to ruin. Let’s stick to rationality, evidence, and rules as the safest course of action. And let us create independent monitors to curtail the threat of any country using global networks for surveillance of or cyberwarfare on others. That way, the world can get on with the urgent task of harnessing breakthrough digital technologies for the global good.

Copyright: Project Syndicate, 2019.

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  • Clyde Duncan  On 11/15/2019 at 8:01 am

    We Are Losing Trump’s Trade War

    David Cay Johnston | DCReport – Editor-in-Chief

    Candidate Donald Trump railed against America’s chronic trade deficits, vowing to eliminate them if he became president.

    So, how’s Trump doing? AWFUL. Trade deficits are growing on his watch.

    The overall trade deficit in September was 21% larger than during his first full month in office. In fact, 21-Percent MORE than President Obama’s Trade Deficit

    In 2016, under President Barack Obama, America imported $502.9 billion more in goods and services than it sold in exports.

    In 2018, under Trump, that BALLOONED TO $627.7 billion, an increase of $124.7 billion, and the deficit is on pace to run even deeper in 2019.

    For the nine months ending in September, the overall trade deficit was $481.3 billion, up $24.8 billion for the same period of 2018.

    Trump’s TARIFFS ARE A TAX ON AMERICANS, paid by companies who import goods and then either passed on to consumers or absorbed as reduced profits.

    Our deficit in goods traded with China grew through last year. Indeed, the 2018 deficit of $419.5 billion was the largest on record, up a whopping 21-Percent over the $346.8 billion of Obama’s last calendar year as president.

    So far, 2019 looks like it will come in around $360 billion.

    The deficit with China is smaller because of the balance of trade – the trade volume has shrunk. That, in turn, means fewer jobs for Americans, close to 11 million of whom, the Commerce Department estimates, owe their jobs to trade with China.

    MEXICO, Too

    And what of Mexico, another Trump trade bugaboo? In 2016, Obama’s last year, our trade deficit in goods was $63.3 billion. THAT ROSE TO $80.7 billion in 2018. That is a 27-Percent increase under Trump.

    In just the first nine months of this year, our Mexico goods deficit was $76.1 billion, meaning 2019 WILL EASILY SET A NEW RECORD DEFICIT.

    Trump’s disregard for trade in services is a most curious omission for a man who boasts, falsely, that he has an economics degree from Penn’s famous Wharton School of Finance. His degree, for which he mostly did independent studies while working for his father, is from a one-professor real estate department at Penn that was under Wharton, which is a graduate school.

    Equally troubling is Trump’s mistaken belief that China and Mexico pay the tariffs he has placed on their goods. [Whether Trump believes this is another question – his cult is convinced this is the case]

    Trump’s TARIFFS ARE NOT PAID BY CHINA. Tariffs are a tax on Americans, paid by companies who import goods and then either passed on to consumers or absorbed as reduced profits. The Treasury Department, by the way, calls them “CUSTOMS DUTIES”.


    Trump’s tariffs cost Americans $71 billion in the first nine months of 2019 calendar year.

    So far, Trump has spent $28 billion of Americans’ tax money in bailout money for soybean and other Midwest farmers whose major market he decimated with his anti-China trade policies.

    The damage may last years or decades because CHINA SWITCHED TO OTHER for soybeans, promising to buy up to $50 billion a year from Brazil.

    Think of that as a Trump “PUT BRAZIL FARMERS FIRST” policy.

    During a Sept. 4 news conference on Hurricane Dorian, the one that he falsely said would hit Alabama, Trump veered off into China trade with assertions that were just as false:

    “We have a lot of — we’ve taken in tens of billions of dollars in tariffs from China. Prices have not gone up, or they’ve gone up very little. China has paid for most of that, and I say paid for all of it. China has now had the worst year that they’ve had in 57 years. This is the worst year they’ve had in 57 years. And they want to make a deal; we’ll see what happens.”

    That was such nonsense that anyone who knows their Chinese history laughed.

    In 1962 China was a poor farm country with minimal industry. It was still under Mao, whose policies resulted in mass starvation that some historians estimate at 45 million people dying.

    What is fact is that the spectacular growth of the Chinese economy has slowed to its lowest level in the last three decades.


    The Trump tariffs pretty much wiped out the modest income tax savings that went to the bottom 90% of Americans under the Trump/Radical Republican tax cut law enacted in December 2017.


    So, while Trump has tricked millions of Americans into believing he cut their tax burdens, he has actually raised their total burden with his tariffs.

    Trump’s tariffs are also slowing economic growth and in time will mean 512,000 fewer jobs than if the tariffs had never been imposed, Tax Foundation has noted.

    Analysis by Trade Partnership, a consulting firm, asserted that the “biggest winners from tariffs on Chinese cell phones are other foreign producers.

    Manufacturers in Korea and Vietnam would see annual export revenues grow by about $1.8 billion and $1.2 billion, respectively. AMERICAN CONSUMERS, on the other hand, WOULD PAY OVER $8.1 BILLION MORE FOR CELL PHONES.”

    Prices for laptops, video games and toy drones are also expected to rise significantly, costing American consumers billions more for those who do buy.

    The study predicted a 35-Percent drop in laptop purchases.

    Because there is virtually no laptop manufacturing in the United States, “American consumers would pay $785 in new out of pocket expenses for each $1 in new revenue for American manufacturers,” Trade Partnership estimated.


  • Clyde Duncan  On 11/15/2019 at 8:46 am

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