President Trump can and very likely will cut a trade deal with China that removes most tariffs. But it will require Trump to resolve Chinese intellectual property theft outside of the deal.
Don’t get me wrong, China’s intellectual property theft is an extraordinarily serious affront to U.S. economic potential and national security. But Xi Jinping needs to steal U.S. intellectual property in order to maintain economic growth, and to support his developing cyber, satellite, and conventional military power. He isn’t just going to give that up.
Xi has no interest in co-existing with the U.S.-led international system. He wants to replace it. And he will not budge on the intellectual property theft he needs to achieve that strategic objective. Trump can probably gain some ground on this, but he will have to deal with it outside of the trade deal.
On the other hand, a trade deal that eliminates most tariffs and offers greater U.S. low-tech sector export growth would be worth it. At the margin, it would help boost U.S. exports and job creation.
So how to stop China’s intellectual property theft? With a mixture of intelligence, military, and economic countermeasures outside of the trade deal. Some of these options are already being employed. Regarding intelligence, the U.S. disrupts Chinese theft operations and educates allied governments to the common threat. An example here is the campaign to deny Chinese technology access to western infrastructure programs.
But the U.S. could also do far more to prevent U.S. companies from sharing intellectual property as a condition for Chinese market access — at least blocking Beijing’s method of stealing in plain sight. Google’s absurdly unpatriotic deference to Beijing is particularly concerning in this regard.
Washington should also make clearer that China’s most aggressive cyber intrusions will result in outsized U.S. retaliation. This might, for example, involve destroying the mainframes of a Chinese corporate competitor, of a science college (China uses computer science colleges as stage one cyber-intelligence schools), or of a People’s Liberation Army facility.
The key here is to match realism to deterrent resolve. Pursuing that course, the U.S. is likely to cut a trade deal with China in the coming weeks. Resolving the other issues will necessarily involve other instruments of U.S. power.
