US Takes Its First Pawns in Industrial War With China

March 29, 2018 3:23 pm Last Updated: April 16, 2018 9:56 am

Your first moves in a fight are never the main ones. They are designed to feel out the competition, to engage, and to get a feel for an opponent’s speed, power, response, penetration, and reflex. Once you get an idea of your opponents’ strengths and weaknesses, then you launch an attack on them with the intent to try to knock them out, push them back, scare them away, or—if you are bold enough—incapacitate them.

On March 22, the Trump administration slapped $50 billion to $60 billion in tariffs on Chinese goods entering the United States. This indicates that the United States is very serious about repairing the $375 billion trade deficit with China and ending Chinese economic theft. This first retaliatory shot in the industrial war with China is likely designed to feel them out, to get an idea of how to strike them, and to counter their strikes.

The Chinese retaliation was comparatively light and placed a $3 billion tariff on American goods going into China. It was basically a block against the first strike—and that’s what you do when someone reaches out to your export area: You intercept the strike, instead of attacking the opponent’s body.

The world does not adhere to U.S. law, and, until now, China has played by its own rules in global trade.

After the initial blows, the conflict went to the negotiating table, and senior officials with the Chinese regime have reportedly begun working with the United States to reach a new trade agreement. Initial reports said that China may cave on several U.S. demands.

Yet, as the Roman general Vegetius once famously stated, “If you want peace, prepare for war.” If negotiations are inadequate, or if the conflict grows into an open industrial war, both countries would be fighting for their economic lifeblood. With this in mind, we can benefit from gaining a better grasp on how industrial wars are fought.

Video: How Industrial warfare has occurred between USA and China

The Workings of Industrial Warfare

Let’s take a look at aircraft manufacturer Boeing as a case study in industrial warfare. The Chinese regime was already working to steal aerospace technology and was working with foreign aircraft manufacturers like Boeing while quietly taking steps to replace these same companies in the global market.

One in every four jetliners that the Chinese buy are from Boeing. As soon as the U.S. strike came, pressure was applied to Boeing immediately, by sourcing other supply chains and holding back financial payments. The Chinese regime then levied a second strike of canceling orders on existing aircraft.

It is obvious that China is creating its own airliner from the technology transfers originally created in the Boeing deals, most of which have already been transferred. China can replace those contracts by contracting other suppliers around the world, with Airbus, Embraer, and Aeroflot being natural examples.

On the surface, it would appear that Boeing was suffering from attacks on Chinese trade, while in reality, it would merely be a hiccup in a longer-term strategy of the Chinese regime to replicate, then replace, the companies it is competing with.

As the Chinese regime struck deals, the partnerships it formed with companies were not based on American business culture. These deals were based on the business culture of the Chinese Communist Party—and there is a significant difference.

American companies have complained about this model of Chinese business culture, because it is such an invasive and predatory form of industrial warfare, and if taken to court would unlikely survive the ramifications of U.S. law. But the world does not adhere to U.S. law, and, until now, China has played by its own rules in global trade.

The Economic Fight

An industrial war needs legal backing and protections from the government, but it also needs industries to engage in the fight themselves.

It is the industries that must take up the gloves and be able to fight for themselves in the area of industrial warfare. Government can nudge them into the market battlefield through funding, education, and support.

With China, in particular, after the U.S. government employs tariffs and laws, and sets the battlefield, it will be on the industries to fight the war. It’s on the industrial battlefield where the orders are being taken, where the manufacturing is being done, and where the money changes hands.

For businesses, this means finding out the exact points where products are being supplied to countries, and then engaging with those countries for the same product market.

When a customer goes to a shop, they should be able to see a product on the shelf of that shop. Is it made in America, China, or Japan? The customer then needs to decide whether to hand over money for that product or not. This is what the tariffs can be used for—to keep your product out of the shops, to keep it off the shelf, or to limit your exports down to a trickle. The decision then becomes, “Shall we bother to engage this country in the first place, or shall we go somewhere else we can sell?”

The first shots in the new industrial war have been fired, and we need to analyze the first moves made, where we need to sharpen up maneuvers, and how we can industrially strike a competitor without getting six punches, two kicks, three knees, and two elbows in the Western economies’ face.

Industrial warfare is a very complex game, and if you don’t know how to play it, you may end up doing damage to yourself.

Amar Manzoor is the author of “The Art of Industrial Warfare” and the founder of the 7Tao Industrial Warfare combat system, which he teaches to students.