SinoTech

Sinotech: Trump Imposes Tariffs on $200 Billion of Goods; China Cannot Respond in Kind Anymore

By David Stanton, Wenqing Zhao
Wednesday, September 19, 2018, 12:45 PM

President Trump announced on Monday that his administration will begin imposing new tariffs against $200 billion in Chinese imports next week. Starting on Sept. 24, the government will subject those imports to 10 percent tariffs; that tariff rate will jump to 25 percent on Jan. 1. Trump also announced that, should the Chinese government take “retaliatory action,” he would immediately move to initiate a final wave of tariffs against an additional $267 billion in Chinese imports. That “third phase” of tariffs, combined with the $200 billion and $50 billion tariffs that the United States has already imposed on China, would extend President Trump’s tariffs to cover all Chinese imports to the United States.

China responded by announcing its own new 5 to 10 percent tariffs against $60 billion in American imports, also to be implemented on Sept. 24. That will expand Chinese tariffs to $110 billion in U.S. goods, close to the total of $130 billion in American imports to China in 2017. China’s inability to respond in kind has fueled fears that officials may retaliate through other means that could make it harder for American firms to operate in China. The Trump administration has yet to respond formally to China’s retaliation, though the president tweeted on Tuesday that there would be “great and fast economic retaliation against China if our farmers, ranchers and/or industrial workers are targeted.”

The administration announced the tariffs amid the prospect of renewed negotiations between the Chinese and American officials. Treasury Secretary Steve Mnuchin reportedly reached out to senior Chinese officials last week to propose new talks, reflecting the administration’s belief that Chinese officials had begun to feel the tariffs’ bite. The parties had discussed a preliminary visit by a “top economic policy official” earlier this week, to be followed by a lengthier visit by Chinese economic czar Liu He next week. But Chinese officials reportedly refused to engage in negotiations if President Trump implemented the most recent wave of $200 billion tariffs, so any new talks are unlikely to occur in the near future.

Trump Administration Weighs Xinjiang Sanctions

The Trump administration is considering sanctions against officials and companies involved in the Chinese government’s repression of the Uighur population in the western province of Xinjiang, according to Reuters. The Chinese government has long kept a watchful eye on the Uighurs, a predominantly Muslim Turkic group that the Chinese government associates with a history of separatist movements. Tensions have continued to escalate over the past decade as the Chinese government has increased controls over daily life in Xinjiang and sought to limit expressions of Uighur identity. In 2009, mass riots in Urumqi, Xinjiang’s capital, resulted in the deaths of at least 197 people amid tensions between the Uighur and Han Chinese populations. In 2013, Chinese security forces fired shots into a crowd protesting the arrest of a religious leader, leaving an uncertain number dead. In 2014, knife-wielding Uighur separatists killed 31 and injured over 140 at a train station in southwestern Yunnan province.

As the Chinese government has cracked down on dissent, Xinjiang has quickly become a testing ground for the newest developments in the domestic surveillance state. Over recent years, the Chinese government has instituted a campaign of mass detention and ‘reeducation’ of the Uighur population. A complex web of surveillance technologies is used to identify and track potential dissidents. Government procurement orders reveal significant expenditures on facial-recognition systems, surveillance cameras, and platforms for the integration and analysis of this data. International attention has increased substantially since early August, when an American member of the United Nations Committee on the Elimination of Racial Discrimination cited reports that China may be holding more than one million Uighurs indefinitely in detention camps. On Sept. 9, Human Rights Watch issued a report “presenting new evidence of the Chinese government’s mass arbitrary detention, torture, and mistreatment of the [Xinjiang] region’s Muslim minority, including indefinite detention of an estimated one million people in unlawful ‘political education camps’ and increasingly pervasive controls on the daily life of 13 million Turkic Muslims in the region.”

The Trump administration’s prospective sanctions would use the Global Magnitsky Act to target tech firms, such as Chinese surveillance camera maker Hikvision, that have provided technologies used to conduct surveillance in Xinjiang. Congressional attention to this issue has been mounting; Sen. Marco Rubio and Rep. Chris Smith, co-chairs of the Congressional-Executive Commission on China, wrote to Commerce Secretary Wilbur Ross in May to ask whether his department’s Bureau of Industry and Security was monitoring exports of technologies used to repress Xinjiang’s population, and a bipartisan group of 16 senators and representatives wrote to the White House in late August to encourage sanctions. The likelihood, timeframe and scope of potential sanctions is currently unclear.

U.S. tech firms face Congressional scrutiny for Chinese partnerships

Facebook Chief Operating Officer Sheryl Sandberg and Twitter CEO Jack Dorsey testified on foreign efforts to influence American politics before the Senate intelligence committee on Sept. 5, prompting several senators to ask about their partnerships with Chinese companies. Facebook earned substantial opprobrium in June of this year after revealing that it had shared user data with Chinese hardware manufacturers, including Huawei and Lenovo, that are viewed suspiciously by the American government. Twitter and Google have also formed partnerships with Chinese tech firms, though less is known about those arrangements. Neither Sandberg nor Dorsey promised to provide the senators with more information about their relationships. Google missed the hearing after declining to make CEO Sundar Pichai or cofounder Larry Page available to testify, a snub that was castigated by committee members. Google’s chief privacy officer will attend a Senate commerce committee hearing on consumer data-privacy on Sept. 26, alongside executives from Apple, Amazon and Twitter.

The Sept. 26 hearing may renew debates over U.S. tech companies’ activities in the Chinese market, particularly in light of Google’  recently revealed plan, nicknamed “Dragonfly,” to re-enter the Chinese market by providing a censored search engine. A prototype of Dragonfly was recently revealed to link searches to phone numbers and to allow the Chinese government to track the search histories of its citizens. A bipartisan group of 16 U.S. lawmakers recently published a letter prodding Google on its plans to rejoin the Chinese market for online search. Despite the controversy, Google appears prepared to continue its push into the Chinese market, as it showcased its AI technology, along with Amazon and Microsoft, at the World Artificial Intelligence Conference, a Chinese state-backed forum in Shanghai.

In other news

  • Chinese Vice-Premier Liu He also appeared at the World Artificial Intelligence Conference, delivering a speech that encouraged cooperation in AI research among the “global village”. President Xi, in a prepared letter, also encouraged “deepened collaboration” between Chinese and foreign AI firms. Those statements demonstrate a softer approach to artificial intelligence competition than the Chinese government’s internal messaging, most notably reflected in last year’s AI development roadmap. But that approach appears to be working, as American tech giants appear enthusiastic about Chinese AI opportunities. During the conference, both Microsoft and Amazon announced plans to build Chinese AI research facilities.
  • Chinese e-commerce giant Alibaba Group announced that co-founder and Chairman Jack Ma will step down in one year. He will be succeeded by current CEO Daniel Zhang. Ma, an emblem of China’s economic transformation and icon of the country’s technological boom, warned that a U.S.-China trade war could last for up to 20 years at Alibaba annual investors’ conference on Sept. 18. That statement likely reflects a growing belief among Chinese elites, who increasingly view the trade conflict as a means to stymie China’s long-term development. Ma has taken a consistently pessimistic view of the trade war, and advocated against the initiation of tariffs in a Washington Post editorial earlier this year.
  • The Justice Department will require Xinhua News Agency and China Global Television Network, two of the largest Chinese state-owned media outlets, to register under the Foreign Agents Registration Act. The department ordered two Russian state outlets to register under the Foreign Agents Registration Act last November.
  • Commuters at the West Kowloon terminus of the Hong Kong-Shenzhen-Guangzhou Express Rail have raised data-privacy concerns after noting that the terms and conditions of the station’s public Wi-Fi network allow the collection of users’ names, telephone numbers and browsing history. Under the terms, the information could also be transferred outside of Hong Kong and shared with mainland authorities. Hong Kong’s transport minister, Frank Chan Fan, has assured passengers that their information would not be passed to “other people.”

Commentary and Analysis

Elsewhere on Lawfare, Ashley Deeks considers the efficacy of the potential sanctions against companies supplying facial recognition to the Chinese government. Robert Chesney welcomes the Justice Department’s decision to charge a North Korean hacker for last year’s WannaCry attack and the 2014 Sony Pictures hack, among other intrusions. Herb Lin outlines how the United States should respond to information warfare and influence operations that, like Russia’s interference in the 2016 Presidential election, seek to confuse or discourage its population. The Cyberlaw Podcast has returned from its August hiatus; last week’s episode discussed recent attacks by a hacker outfit working to combat Chinese state-sanctioned theft of intellectual property (at 7:45) and features an interview with Bruce Schneier.

At Brookings, David Dollar traces the U.S.-China trade conflict to economic conditions caused by the previous decade’s financial crisis. At ChinaFile, Roselyn Hsueh, Andrew J. Nathan, George Magnus and Bo Zhiyue discuss the trade conflict’s domestic political ramifications for Xi Jinping. At the Center for a New American Security, Elsa Kania and John Costello explore the Chinese government’s mission to become a leader in quantum computing technology. At the Council on Foreign Relations, Benn Steil and Benjamin Della Rocca examine how the trade conflict is affecting domestic stock markets.

In Foreign Affairs, Cheng Li examines how the Chinese middle class has responded to the trade conflict. In the Wall Street Journal, Aruna Viswanatha and Kate O’Keeffe investigate suspected Chinese industrial espionage of Equifax’s intellectual property in 2015, two years before that company’s noted data breach, and Bob Davis and Lingling Wei argue that American officials’ focus on rewriting NAFTA will make it more difficult to negotiate an end to the trade conflict with China. In Foreign Policy, Rui Zhong suggests that China’s move toward a cashless society is likely to hurt the rural poor. In the New York Times, Keith Bradsher analyzes the Chinese government’s retaliatory options to the latest American tariffs, and the Editorial Board encourages President Trump to pursue sanctions against those responsible for repression in Xinjiang.

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