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Taming the Red Dragon in the Trade War
Peter Zhang
1/13/2019

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Washington is understandably seeking to resort to all available means to level the playing field in the current trade war with Beijing.

This war is specifically about the U.S. trade deficit with China, which has reached $152.2 billion, according to the U.S. Census Bureau.

But it’s really about much more than that.

The U.S. Trade Representative has found that “Chinese theft of American IP currently costs between $225 billion and $600 billion annually.”

In recent years, Chinese companies have used state funds to buy U.S. and European companies, thereby acquiring Western technology, including sensitive and classified information.

Meanwhile, U.S. tariffs on China have triggered another round of currency manipulation—a weakened yuan can effectively offset Washington’s import tariffs against Beijing.

More fundamentally, decades of Western efforts to democratize the communist “Middle Kingdom” through granting Permanent Normal Trade Relations status, entry to the World Trade Organization, and allowing Beijing to be fully integrated into the global market has proven to be a fool’s errand.

The unbalanced trade with China is only a symptom of the predatory character of the Chinese regime.

While the United States presses the case for free and fair trade with China, it needs to bring other weapons to bear.

Knowing the Enemy

Sun Tzu (c. 544 B.C.–496 B.C.), perhaps the best-known Chinese military strategist, tells us in “The Art of War”: “Know thy self, know thy enemy. A thousand battles, a thousand victories.”

It is imperative to keep in mind that China, with a population of 1.3 billion, and the Chinese Communist Party (CCP), with only some 80 million members, aren’t the same thing—the CCP imported communism in the 1920s and has been imposing it upon the entire nation since 1949.

Political scientists are generally in agreement that all closed societies rely on three crucial conditions to sustain their survival: 1) controlling information—this includes dissemination of misinformation 2) using violence to maintain power and 3) forcing the masses to accept an ideology that favors the rulers.

These three conditions all prove to be vital for the CCP’s survival.

Today, those in open societies would consider it unthinkable to not have access to some forms of social media and an open internet. But sadly, 600 million Chinese internet users live within an artificially controlled intranet, thanks to the “Great Firewall of China.”

The CCP spends billions of dollars to strengthen its surveillance technology, including the facial and voice recognition know-how stolen from America. Now, Beijing is forcing Apple Inc. to build its cloud-data center inside China so that the regime has access to user information.

Fighting the trade war needs to include exploiting the weak points of the CCP by advancing internet freedom and the rule of law.

Bringing Down China’s ‘Great Firewall’

In 2016, a Harvard study found that the CCP had hired millions who formed the so-called Fifty-Cent Army (a derogatory term used to describe contract workers popularly believed to be making 50 cents per post) to fabricate some 488 million social media posts per year. According to the study, “most of the posts involve cheerleading for China, the revolutionary history of the Communist Party, or other symbols of the regime.”

This misinformation can be nullified, with the Chinese internet becoming the means for replacing it with a factual appraisal of the regime.

According to a 2005 field test by Harvard’s Berkman Center for Internet and Society, among the top censored items on China’s internet are “The Nine Commentaries on the Communist Party,” a book written by the editorial board of The Epoch Times that details crimes and human-rights violations perpetrated by the CCP over the past nine decades.

This book is so revealing and deadly to the legitimacy of the CCP that it isn’t even denounced by the CCP’s Propaganda Department nor by its media outlets, for fear of fostering public awareness.

The means exist for spreading the “Nine Commentaries” through the internet.

In a recent testimony before the U.S. Senate, former State Department official Ely Ratner proposed that “Congress should provide resources and direct the Defense Department to develop the means to circumvent China’s ‘Great Firewall’ and make it easier for Chinese citizens to access the global internet.”

This is a strategic proposal that has multiple long-term constructive implications: By making circumvention tools available, some 600 million Chinese internet users will be able to bypass the “Great Firewall” and communicate with the outside world, thereby creating an informed citizenry and disabling the impact of the CCP’s propaganda machinery.

Over time, the informed masses will become powerful agents for social change. In addition, this is a relatively inexpensive way to bring about positive changes in China, compared with billions of dollars spent on an arms race. This is what the CCP most fears, since freedom of information will mark the end of a closed society.

Upon hearing Mr. Ratner’s testimony on bringing down China’s firewall system, Bao Peng, a close aide to China’s reform-minded former Premier Zhao Zhiyang and now a political dissident in Beijing, wrote on Twitter: “I completely agree. Understanding their own China is what Chinese people need most, and this concerns dismantling the ‘Great Firewall’ and access to the Internet freely! This is a matter that is both too significant and urgent!”

There are a number of free U.S. circumvention tools for users in China and around the world. Most notably, Chinese internet users often rely on technology provided by two American companies: Free Gate and Ultra Surf. Both offer free digital tools that have been well-reviewed by the New York Times, the Washington Post, Forbes, the Wall Street Journal, and Harvard researchers.

While the capabilities of these two companies are severely limited due to lack of funding—the developers are able-bodied Chinese engineers who successfully escaped to America after surviving the Tiananmen Square massacre or Beijing’s persecution of Falun Gong—they are passionate, perhaps more than anyone, about working to bring down China’s firewall system.

To scale up and help meet the needs of Chinese internet users, these bright individuals, who have the world’s best circumvention technology, desperately need to acquire federal and private funding. Other circumvention tools such as small-scale VPN services based outside China are available, but they aren’t free and can easily be blocked by censors in China.

The US Global Magnitsky Act

The 2016 U.S. Global Magnitsky Act, which allows for sanctioning individuals from other countries for human-rights violations, also gives Washington leverage.

It is an open secret that many CCP officials have moved both their assets and family members overseas, especially to the United States. It is also public knowledge that many of these CCP officials have either directly or indirectly been involved in human-rights violations against underground Christians, Falun Gong practitioners, Tibetans, human-rights lawyers, and public intellectuals.

Denying these people entry visas to America and freezing their assets in the United States for their crimes would not only be sensible, but also would be a righteous thing to do under the jurisdiction of the Magnitsky Act.

Making CCP officials accountable for their human-rights crimes will not only protect America’s interests, but also will send a resounding message to all closed societies that America, as the leader of the free world, stands by and defends the U.N.’s Universal Declaration of Human Rights.

Washington should also consider disclosing all the assets of the CCP officials in the United States, allowing the Chinese populace to be informed of where their tax money actually goes. After all, the income and assets of Chinese officials are a state secret in China.

For years, the Chinese People’s Congress has failed to pass a bill requiring that CCP officials disclose their income and assets, despite public outcry.

In addition, if the Trump administration were to publish a list of CCP officials and their family members who are U.S. green card or passport holders, that would effectively undermine the CCP’s ongoing anti-American and nationalist campaigns.

Disclosing information about assets and immigration status also would cause grave problems for the CCP. It isn’t difficult to imagine the level of public outrage should such information become available inside China, where inequality is immense and Gini co-efficiency is well beyond 4.0—the warning point for social unrest. Transparency or the right to know seems a simple thing, but it can be essential to the well-being of any society.

To tame this Red Dragon in the trade war, we might again wish to follow the wisdom of Sun Tzu, who said, “the supreme art of war is to subdue the enemy without fighting.”

Perhaps a more impactful strategy would be to target the CCP’s weakest points: fear of citizenry awareness from an uncensored internet and retributive justice for its human rights violations under the U.S. Global Magnitsky Act.

At the end of the day, this isn’t about a skirmish with the CCP on trade alone, but a war seeking to end its consistent betrayal of humanity.

***Peter Zhang focuses his research on political economy in China and East Asia. He is a graduate of Beijing International Studies, Fletcher School of Law and Diplomacy, and of Harvard Kennedy School as an Edward Mason Fellow.

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