This year saw the United States ratchet up its confrontation with the Chinese regime.
The Trump administration continued to take Beijing to task on its longstanding abuses in the U.S.–China trade dispute, while authorities ramped up a crackdown on Chinese state-sanctioned economic espionage.
Battle lines drifted into the technology sector as the United States moved to sanction Chinese telecommunications equipment company Huawei over national security concerns, and sought to convince its allies to do the same.
Human rights concerns also made it to the forefront of U.S. policy as the Trump administration took measures to back pro-democracy protesters in Hong Kong and punish Chinese companies and officials for their involvement in abuses in the far western region of Xinjiang.
Overseas, Washington has sought to deepen cooperation with partners in the Indo-Pacific region to contain the Chinese regime’s military and economic ambitions.
After 17 months of on-again, off-again trade negotiations and tit-for-tat tariffs on billions of dollars of imports, Washington and Beijing agreed to a “phase one” trade deal in December.
The agreement, due to be signed in early January, includes commitments by the regime to enforce intellectual property (IP) protections, end forced technology transfers, and ensure a stable yuan currency.
The regime also has agreed to buy an addition $200 billion in U.S. goods and services over the next two years, including about $50 billion in farm products, while the United States agreed not to impose new tariffs that had been due to take effect mid-December and reduce existing tariffs introduced in September.
Over the year, U.S. tariffs on Chinese goods, which had ranged from 15–25 percent on about $325 billion of Chinese goods, contributed to a raft of companies moving or considering plans to relocate their U.S.-bound production out of China to Southeast Asian nations, such as Cambodia and Vietnam. The companies reportedly range from global tech giants Apple and Dell to apparel makers and retailers such as Levi Strauss & Co. and Macy’s.
Analysts have suggested the interim agreement amounted to a temporary reprieve in the trade dispute, and have cautioned against adopting an overly optimistic outlook going into phase two trade negotiations, in light of Beijing’s history of reneging on trade promises.
Another point of concern is that outstanding issues appear trickier to resolve, such as the regime’s subsidies and support for state-owned enterprises, cyberhacking, and its data localization laws, which requires all local and foreign firms to store data within China’s borders.
Huawei, the world’s largest manufacturer of telecom gear, has faced intensified scrutiny in the United States over concerns that its products pose espionage and security risks due to the company’s close ties with the Chinese regime—allegations that the company denies.
Such fears arise since China’s national security laws compel companies to cooperate with intelligence agencies when asked.
In January, one month after Huawei Chief Financial Officer Meng Wanzhou was arrested in Vancouver, Canada, U.S. prosecutors unveiled two indictments against the company.
One indictment charged Huawei with bank fraud tied to breaches of U.S. sanctions against Iran, which Meng is personally allegedly implicated, while the other was for alleged theft of trade secrets against U.S. carrier T-Mobile.
The Department of Justice (DOJ) also is reportedly investigating the company for other instances of intellectual property theft.
In May, during the height of U.S.–China trade tensions, the Trump administration blacklisted Huawei and its 68 affiliates—a number that later was increased to more than 100—from doing business with U.S. firms on national security grounds.
Huawei was dealt another blow in November, when the Federal Communications Commission (FCC) voted 5–0 to designate it and another Chinese telecom firm, ZTE, as national security threats, barring U.S. rural carriers from using federal funds to buy their equipment. The move could force these companies to find alternative suppliers.
“Both companies have close ties to China’s communist government and military apparatus,” FCC Chairman Ajit Pai said ahead of the vote. “Both companies are subject to Chinese laws broadly obligating them to cooperate with any request from the country’s intelligence services and to keep those requests secret. Both companies have engaged in conduct like intellectual property theft, bribery, and corruption.”
As Huawei pushes for expansion into Europe as countries roll out next-generation 5G wireless networks, the United States has continually sought to convince its allies to bar the company from supplying the infrastructure—an endeavor that has yielded mixed results.
Chinese Economic Espionage
This year saw an uptick in federal prosecutions aimed at tackling the Chinese regime’s rampant IP theft, which forms a key part of its ambitions in supplanting the United States as the world’s economic leader.
U.S. officials say state-sanctioned IP theft is endorsed under Beijing’s ambitious “Made in China 2025” industrial plan, which aims to transform the country into a high-tech manufacturing powerhouse by the year 2025. The policy targets 10 industries for development, including robotics, aerospace, and biotechnology.
More than 80 percent of all economic espionage charges brought by federal prosecutors since 2012 implicated China, according to the Justice Department, which in November 2018 launched the “China Initiative” to combat the threats posed by Chinese espionage and other forms of Chinese infiltration into U.S. society.
Meanwhile, the FBI has more than 1,000 active investigations open into IP theft, “almost all leading back to China,” FBI Director Christopher Wray told U.S. senators at a congressional hearing in July.
Since January 2018, more than 30 China-related espionage cases, including those involving Chinese intelligence officers, former U.S. intelligence officials, Chinese nationals, and naturalized U.S. citizens from China, have made headlines.
Notably, U.S. officials have stepped up efforts to curb the theft of sensitive technology from research institutions, as evidenced in a string of cases against scientists.
For example, a University of Kansas researcher was indicted for collecting federal grant money while working full time for a Chinese university; a California-based Chinese couple who were both researchers were charged with stealing trade secrets from a U.S. children’s hospital where they had worked, for the benefit of their Chinese and U.S. biotech companies; and a former scientist at the Los Alamos National Laboratory was charged with lying about his engagement with the “Thousand Talents Plan”—a Chinese recruitment project that critics say facilitates the transfer of U.S. technology and know-how to China.
After months of unrest in Hong Kong over communist encroachment into the city’s autonomy, the U.S. Congress in November overwhelmingly passed the Hong Kong Human Rights and Democracy Act, in a show of solidarity to the pro-democracy demonstrators.
The act, now signed into law, makes the city’s trading privileges with the United States contingent on an annual assessment of whether it is “sufficiently autonomous” from the mainland. It also paves the way for sanctions against Chinese and Hong Kong officials involved in certain human rights violations in the city.
“If America does not speak up for human rights in China because of commercial interests, then we lose all moral authority to speak out for human rights any place in the world,” House Speaker Nancy Pelosi (D-Calif.) said prior to the bill’s passage in the House in October.
The crisis in Hong Kong also spilled over into the commercial sector as a growing number of U.S. companies, including Apple, Blizzard, and the National Basketball Association (NBA), came under heavy criticism for allegedly acting to appease the Chinese regime on the issue.
These cases highlighted the chilling effect the communist regime has on free speech across corporate America.
In October, the administration put 28 Chinese public security bureaus and companies, including video surveillance company Hikvision, on a trade blacklist over their involvement in Beijing’s repression in Xinjiang, where an estimated more than 1 million Uyghurs and other Muslim minorities are detained as part of the regime’s purported efforts to fight “extremism.” It also imposed visa restrictions of regime officials complicit in the campaign.
Earlier this month, the House overwhelmingly passed the Uyghur Act, which would require the administration to toughen its response to human rights abuses in Xinjiang. A similar bill passed the Senate in September, and Congress is working on a final, reconciled version to send to President Donald Trump for his signature.
The U.S. House of Representatives’ Foreign Affairs Committee on Dec. 18 approved legislation calling for stronger U.S. support for religious and human rights in Tibet, known as the Tibet Policy and Support Act of 2019. The bill is expected to go to the full House for a vote.
As part of the administration’s “Indo-Pacific Strategy,” the United States has continued to strengthen defense and economic partnerships with Asian countries, including Taiwan, Japan, and India, to counter the regime’s hegemonic ambitions in the region.
The Trump administration has increased flyovers by U.S. bombers and U.S. Navy patrols in the South China Sea, a hotly disputed waterway where the Chinese regime has built a network of militarized artificial islands and atolls. U.S. officials have repeatedly denounced Beijing’s military buildup and aggressive tactics in the region, which includes deploying coast guard ships and militia fishing boats to intimidate fishing vessels, and block access to waterways.
In November, the United States, Japan, and Australia unveiled the “Blue Dot Network,” a certification scheme that will set international standards for major infrastructure projects. The plan was seen as a move to address criticisms of the Chinese regime’s “One Belt, One Road” (OBOR, also known as Belt and Road) initiative which has been labeled as creating debt traps for recipient countries.