[shantanubala]

This might be an unpopular opinion, but I'll express a counterpoint - viewing the same situation through a different lens.

Put simply, the Chinese understand why American companies outsource their labor to China. Chinese labor is cheaper, and they are under no illusions - this outsourcing means that their own country experiences many of the negative externalities of Western consumption, including pollution.

It's fair for American businesses to distrust Chinese companies and distrust the Chinese government, but can't we all agree that they brought it on themselves?

Which multinational corporation reasonably expects that the Chinese government cares about their bottom line at all? And why do many ordinary Americans experience such outrage on behalf of these multinationals? Of course, I understand why their shareholders (and thus, many Americans) may be upset.

If anything, I'm angry they jumped at the opportunity to eradicate their domestic workforce to a point where China has the opportunity to steal in the first place.

[ctvo]

You are conflating two things in this reply:

There’s the official transfer of technology that happens in some circumstances when a western company wishes to do business in China, that is known and each company makes its own decisions on if this short term trade off is worthwhile.

Americans should be angered that the Chinese, years after joining the WTO, still restrict their markets in this way while enjoying open access to other markets.

This article does not touch the above. It’s about illegal, state sponsored theft of intellectual property. Are you asking why people should be upset another country is attacking companies based in the US and stealing their technology?

[shantanubala]

You're right. I wasn't in any way trying to imply that the Chinese government was acting fairly - they are stealing and ought to be punished.

My confusion stems from the American companies who readily jumped at the opportunity to heavily depend on supply chains inside of a country with 1) a relatively short history in the WTO 2) a previous history of market manipulation and 3) rampant human rights abuses

And let's not mention that the entry into the WTO itself constituted a major overhaul of the Chinese economy, which should in itself be considered an experiment.

I'm disappointed that the risks of trade in China have been understated for so long. And systematically underestimated by American firms.

Or to put it a different way: how surprising is this situation? And does it belie a lack of proper enforcement and a lack of understanding of the risks of doing trade with China?

It feels silly to only examine the narrative where the Chinese government is at fault because that narrative is obvious. What about the culpability of our own government for advocating for China's entry in the WTO? Or the immediate handoff of trade by American corporations when the decision produced short-term gains without examining how many rapid changes China was making to its economy?

[ericd]

I would say that the conditions the Chinese government sets are structured to exploit a large structural flaw in the American economy, in that the decision makers in most large companies are highly incentivized to achieve short term results even at the expense of long term. So the Chinese government offers to reward those decision makers handsomely in the short run, in exchange for essentially selling the tech lead the US has enjoyed and which underpins much of the value of US enterprises.

[linkregister]

American companies, such as K-Mart, which failed to follow their peers (Walmart, Target) into setting up supply chains in China, ended up in defeat.

There are counterexamples, but most companies seeking to wait this out did not flourish.

"Markets can remain irrational longer than you can remain solvent" - Keynes

[prewett]

From a consumer perspective, K-Mart was failing before everyone started rushing to China. And Walmart's US logistics was way ahead of everyone else, which is what enabled them to have lower prices. Target succeeds due to having products that actually look good, as opposed to Walmart, whose style is distinctly lack-of-style. I remember going to K-Mart, and Walmart easily beat them without needing to go to China.

I'm not sure I see what kind of supply chains Walmart has in China, since it mostly sells other companies' goods. Maybe it produces the house brand (can't remember the name) in China itself, but I wouldn't be surprised if it outsources that.

[ericd]

Lack of a China strategy had very little to do with why K-Mart imploded afaict. Read a bit about Lampert’s strategies if you want to get a sense of the reasons there.

[est]

It goes both ways. Why doesn't Mexico have a IP "theft" problem? Because they are only capable of labor outsourcing.

China on the other hand has a complete domestic industry, they can make everything from tiny screws to atom bombs. There are only handful of countries can do this, if I recall correctly only USA and China. These countries' government has a long term goal of a self-sufficient, independent economy in case of doomsday scenario. Rest of the world depend on each other somehow.

Thus China kinda have an strong domestic supply chain. And it would be foolish not to copy because you have the productivity and scale advantage.

[coliveira]

I wouldn't count the US among countries that can produce anything. Of course things can change, but right now the US doesn't produce most things that are consumed internally, and it has been like that for more than a decade.

[ericd]

I’m not saying they shouldn’t try, just commenting on how I see their attempt being structured to exploit a weakness in US companies, which the US govt. should probably try to patch via law.

[oldandtired]

> You're right. I wasn't in any way trying to imply that the Chinese government was acting fairly - they are stealing and ought to be punished.

The Chinese government is doing nothing different to the USA government. So, of one accuses the Chinese government of acting unfairly, then one must also accuse the USA government the same way. The Chinese government is only acting in the same manner as the USA government.

If the Chinese government is "stealing and must be punished", then so to is the USA government and the same punishment needs to be handed out to the USA government.

The actions being discussed are common to all governments (and a lot of companies as well) and if you want things to change then you have to take seriously your responsibility to bring about change in your government.

I am no fan of the Chinese government and I am no fan of the USA government. From my perspective, they are both acting in the same manner and are both causing serious damage to the world in all sorts of ways. But that is a discussion for another time and place.

[notSupplied]

Sure, the US government engages in espionage. But there is a huge difference between stealing the specs of the latest Chinese fighter jet so you know how to engage against them, and stealing in order to hand it off to your own domestic industry to give them an edge.

[majia]

The US does conduct espionage to help its political and economic negotiations. Its goal is to give us industry an edge too. The US isn’t performing commercial spying simply because there isn’t much valuable staff for it to steal. It’s rather hypocritical to critize one form of espionage and think the other forms are ok.

[oldandtired]

I am not talking about espionage. I am talking about the situation where the US government takes what someone who is not a US citizen and located in another country has spent two decades privately working on a technology and then when patenting it, is informed that not only has the US government taken the use of the technology but if he speaks on the details of that technology in any public way, he will be imprisoned. No objections allowed, no payments received, only punishment if he discusses the subject matter.

As I have watched him do this research and development over those two decades, I recently asked him how it was going. He only response was the above and he would not discuss further that technology to protect me, my family and his family from any repercussions.

As I have come across this kind of activity before, I take the entire "stealing of intellectual property" concept as something that governments like to indulge in and like to accuse others of the "heinous" action while trying to appear as lily white innocents themselves.

YMMV, but as far as I am concerned China is just the new USA.

[walterbell]

Article on patents and secrecy orders: https://www.wired.com/2013/04/gov-secrecy-orders-on-patents/

[oldandtired]

> It’s about illegal, state sponsored theft of intellectual property. Are you asking why people should be upset another country is attacking companies based in the US and stealing their technology?

It is state sponsored appropriation of knowledge not "illegal state sponsored theft of intellectual property". The USA government sponsors this kind of appropriation of knowledge all the time, so why is anyone upset when the Chinese government (or any other government for that matter) does this?

This is simply a fact of life and has been the action of governments and other organisations for millennia.

[ctvo]

You need to post a citation where the US government is actively sponsoring hacking of systems owned by private companies with the aim of stealing their IP to give US based companies an economic edge.

There is no analogy here between the US, EU, et al and China until you provide this.

[oldandtired]

I gave one example of this that I personally know. Over the years I have seen this same scenario discussed by all sorts of people (business owners, technologists, etc). It various ways, this has even been discussed by the IEEE.

Whether you want to acknowledge the sameness of the USA government to the Chinese government in these areas or not, the Chinese government is only following in the well trod footsteps of the USA government.

The USA as a whole had a foundation that was extraordinary, but this foundation has been well and truly eroded in the last couple of centuries. What's the applicable phrase? Oh yes - "Oh how far it has fallen and knows it not."

[rgbrenner]

Americans are ok with companies outsourcing their labor to other countries... as long as those countries play fair. The assumption is that in a fair game, American's will find a way to win. But China doesn't play fair.

This is like you and me playing a game, and I find out you're a cheater.. and you say, 'what are you upset about? You invited me here'

[solotronics]

It is a known factor of business in China that they will try and cheat you. We assume in the U.S. that at least people will act according to the moral standard set by our society but this standard doesn't seem to apply to strangers or foreigners in China.

Before you call me jingoistic I have worked and lived in China and they just have a different outlook on "scam" business there.

https://www.youtube.com/watch?v=5ncOyYzOP3w

[A2017U1]

> as long as those countries play fair

Which outsourcing destination has the same environmental and worker safety protections as the in the West?

A western factory polluting rivers and freely harming employees could compete quite well on the world stage.

[snupples]

I think your choice of words isn't the greatest. There is absolutely no such assumption behind the ideal of fair and open markets. The assumption is both sides benefit when competition is open and fair.

[redial]

> As long as those countries play fair.

And what a coincidence, the US decides what fair is. Bombing other countries and occupying them for their oil and other resources is totally fair.

[rgbrenner]

For sure. Just look at all the american companies pumping oil out of Iraq: https://en.wikipedia.org/wiki/Petroleum_industry_in_Iraq

Sure, Iraq exports more oil to China (21%) and India (20%) than it does to the US (13%).. but I'm sure that was somehow part of the conspiracy. So dont let that change your opinion.

[phyller]

This is a losing argument, the people (many many people) that believe these wars were all about the USA stealing oil and gold will never change their minds, they didn't get that opinion in the first place because they were thinking very logically about it or looking into it. The US having anything other than evil motives is not a possibility to be considered, so everything they do must be explained in a way that shows the US has bad intentions.

I've had these arguments with internationals living, working, and studying in America with Americans and its a dead end.

[redial]

Yes, the US leveled an entire country and has been occupying it for almost 20 years just out of the goodness of their heart, grandma must be so proud, no economic interest whatsoever!

What confuses people like you is that you think selling the oil is the only way the US has to benefit from the war. The US most of all, like all superpowers before it, wants control of the market.

[phyller]

Exactly, you make my point. If somehow you think the US had benefited from this you are crazy. The US didn't pour billions of dollars into Iraq, no one in the region was threatened by a despot with the third largest military in the world, it was just a followup to the amazing economic windfalls of Vietnam and Korea!

[adventured]

> the US leveled an entire country

The US didn't level Iraq in fact. The Iraqis leveled Iraq trying to murder each other in a large civil war that the US tried for years to stop (it could have just left instead). The US lost thousands of soldiers and a trillion dollars stepping in-between those factions. The Sunni and Shia in Iraq have hated each other for hundreds of years and immediately began killing each other after Saddam's Government fell. Saddam's 'solution' for that conflict previously was extreme oppression of the majority Shia. The only rational solution is to split the country into pieces; until then the conflict will continue perpetually.

> has been occupying it for almost 20 years

You're inventing that.

The US isn't occupying Iraq and certainly hasn't occupied it for 20 years. The US has single digit thousands of troops in Iraq in mostly supporting roles, at the invitation of the Iraqi Government. It previously left at the request of the Iraqi Government during the Obama Admin.

Please tell me how the US can occupy Iraq with a few thousand soldiers, when it couldn't control Iraq previously with more than a hundred thousand soldiers.

> you think selling the oil is the only way the US has to benefit from the war. The US most of all, like all superpowers before it, wants control of the market.

The US had dramatically more control of the Iraqi oil market before the war, with the ability to raise or lower output at will, using the aggressive sanction regime that was in place against Saddam Hussein's government. If the US wanted more Iraqi oil on the market, all it had to do is relax sanctions or look the other way as countries cheated on the sanctions.

Now Iraqi oil output is heading to new record highs, with the US having very little control over it. In fact, in your theory the US has an incentive to decimate the Iraqi oil industry rather than see it thrive. The US is the world's largest oil producer and has the most to gain from that. Projections are for US oil production to climb to 15-18 million barrels per day, far beyond Saudi and Russia, over the coming decade. It would be a large benefit to US oil producers - keeping prices up - to not have Iraq producing so much oil over that time.

The post Saddam ten year era in Iraq - the occupation - was about nation building, a foolish exercise of a superpower. The same is true about trying to prop up the Afghanistan Government vs the Taliban (a nearly impossible task). The US has vaporized a trillion dollars in Afghanistan, there is no way that can ever be recouped. The US had prior success with nation building in Europe and Asia and ignorantly believed it could accomplish a positive outcome in the Middle East.

[mortehu]

This is a pretty weak argument since crude oil is a commodity and selling it anywhere reduces its price everywhere.

[redial]

And what currency are all those exports in?

And all those 'reconstruction' billions and decades long military contracts don't benefit anyone I'm sure.

[Wowfunhappy]

> The assumption is that in a fair game, Americans will find a way to win.

Perhaps that's exactly why China feels the need to cheat? From their point of view, the deck was stacked against them. They need to even the odds.

[phyller]

The United States has given China preferential trade deals (deals that are unfair by benefitting China) since the Nixon era. It is truly a tragedy that these two countries don't get along better.

[jayd16]

In every game, every player assumes they can find a way to win. That doesn't imply unfair odds.

[thaumasiotes]

What are you trying to say? This doesn't even pass the laugh test.

You and Tiger Woods, golf, go! Good luck.

[jayd16]

Sorry, implied in my comment is "any game both parties would bother playing" they both expect a chance to win or they wouldn't play at all.

But that aside, the point of my comment is "the opponent expecting to win, does not imply unfair odds."

"America thinks trade is good" does not imply "China gets to steal IP"

[pbalau]

> The assumption is that in a fair game, American's will find a way to win.

So, if America fails to find a way to win, the game is rigged? I mean, if this über country doesn't find a way to win, game being rigged is the only explanation... Where did I hear this before?

> This is like you and me playing a game, and I find out you're a cheater...

No, this is like you and me playing a game and if you don't win, you accuse me of being a cheater.

[phyller]

Both you and the comment you are responding to are wrong because in international trade there should not be one loser and one winner. There should only be winners and no losers. That is not only possible but that is the normal state, and why the world has been increasingly prosperous. It is not a zero sum gain when two nations trade, they actually create wealth by each doing what they do best and trading.

With this understanding, if any side finds that they are on the "losing" end of a deal, they should be upset. The United States has increased its wealth partially by increasing everyone else's wealth (as have other countries) and that is the way it should be.

[rgbrenner]

This isn't an argument either side is making. No one is under some delusion that China is playing a fair game. Even China themselves says they need more time to make reforms. Why do you need to make reforms if you're already playing fair?

[bllguo]

So if the game is "fair" America wins. That sounds more like a rigged game to me.

[rgbrenner]

That's not what I said. Americans assume american companies are capable of competing. If they fail, they fail.. as long as the rules were fair, no problem. There are millions of failed american companies that no american is shedding any tears over.

[est]

Amazon.cn is doing online retail business but it not successful by any means.

[phyller]

If the game is fair, both trade partners win, no one loses. Trade is not and should not be a zero sum gain.

[est]

> The assumption is that in a fair game, American's will find a way to win

Devil's advocate: the only disadvantage of US companies in China is FCPA.

Google failed in China because Kaifulee can not gift one iPad to a high rank communist party official. iPad were considered luxury at that time. Every other competitors do.

In other industries, some European joint adventures do govn't lobbying and media manipulation. Since media is controlled by the Chinese govn't, you must have "connections" or "guanxi" to pull things off.

If US can have exemption allowing companies have "convenient" business strategies in China, Chinese govn't and domestic copycats do not stand a chance.

[edoo]

One of the primary reasons it is cheaper to build in China is they do not enforce pollution laws. We outlawed destroying the environment and all our friendly harmless corporations just moved production to where it is de facto legal. If we are not hypocrites we should be rejecting any products not built to our environmental standards.

[baybal2]

No, have bothered to google for 5 minutes to check that zero enforcement was not the case for at least a decade?

[edoo]

No doubt there is some enforcement but it could get a lot better and still be a disaster. They need a zero tolerance policy backed up by jail time. I was in China 2 years ago and the Beijing air was gross and half the people were wearing surgical masks. In one part a few hundred miles from Beijing I experienced eye watering choking pollution hazes with 100m visibility that lasted for several hours. It was literally scary pollution.

[neolefty]

Yes, as long as the US tries to maintain its advantage over other countries, of course other countries will claw back their own disadvantage.

In the meantime, we're gradually building up a world community so that there isn't a sense of injustice or inequality on anyone's part. If your primary identity is human — rather than Chinese or American — then priorities are simpler. Do what's right for the world as a whole, and for humanity.

That change is too disruptive to do all at once, but it's gradually coming, generation by generation.

[jayd16]

>the negative externalities of Western consumption, including pollution.

That pollution is their own choice. Companies will take advantage but its certainly a choice of the Chinese.

As for why China is treated differently...they act differently. America trades with many countries and China is unique in many ways.

[lsseckman]

> And why do many ordinary Americans experience such outrage on behalf of these multinationals

These are companies we all helped build in one way or another.

Their revenues boost our economy and pay for a lot of our govt services

[thr0waway2324]

This. These countries also export to the rest of the world, strengthening the US dollar and making our nation richer.

[joefranklinsrs]

If we look at the history of how US dismantled its manufacturing after the 90s (yes it started way before, but it was in much smaller scope), it was WALL STREET manipulation that allowed jobs to escape to countries with lowest amount of human rights but cheapest wages. You see before then, companies did offshoring but it was in small quantities, because they feared the unions and especially the massive import tariffs that would have been thrusted on them by the government if they had gone mostly offshore.

NAFTA, which was heavily pushed by wall street and also welcomed by certain corporations, snuck in through NAFTA-friendly advisors that Clinton surrounded himself with. By establishing the principle that U.S. corporations could relocate production elsewhere and sell back into the United States, NAFTA undercut the bargaining power of American workers. Also by letting China into WTO in the 90s, China has been abusing the rules ever since, destroying manufacturing jobs in democratic countries around the world. Bush escalated the suffering by giving China most preferred status. Obama didn't do much to contest except some stern warnings against China.

And now we have a belligerent China, lead by a dictator, that is more powerful than USSR in its heydays, with signs of third-reich behaviors (muslim concentration camps, technology-thought controls), vastly increasing its military and technological weapons to confront and attack US and its allies. And technology companies are still transferring technologies to China, either willingly, unwillingly or unknowingly.

WALL STREET did this. Some corporations were complicit. Then most of them were. Bill Clinton destroyed the American workers. Every other presidents that followed didn't stand up. Trump actually confronted China.

And now WALL STREET is trying to stop the full $600B trade tariffs against China.

[friedman23]

>It's fair for American businesses to distrust Chinese companies and distrust the Chinese government, but can't we all agree that they brought it on themselves?

And do you hold the same belief in reverse? That the Chinese have brought on this retaliation themselves? Your argument and assertion are pointless.