https://www.project-syndicate.org/c...a-is-the-new-japan-by-stephen-s-roach-2019-05 Japan Then, China Now Stephen Roach. Back in the 1980s, Japan was portrayed as the greatest economic threat to the United States, and allegations of intellectual property theft were only part of Americans' vilification. Thirty years later, Americans have made China the villain, when, just like three decades ago, they should be looking squarely in the mirror “When governments permit counterfeiting or copying of American products, it is stealing our future, and it is no longer free trade.” So said US President Ronald Reagan, commenting on Japan after the Plaza Accord was concluded in September 1985. Today resembles, in many respects, a remake of this 1980s movie, but with a reality-television star replacing a Hollywood film star in the presidential leading role – and with a new villain in place of Japan. Back in the 1980s, Japan was portrayed as America’s greatest economic threat – not only because of allegations of intellectual property theft, but also because of concerns about currency manipulation, state-sponsored industrial policy, a hollowing out of US manufacturing, and an outsize bilateral trade deficit. In its standoff with the US, Japan ultimately blinked, but it paid a steep price for doing so – nearly three “lost” decades of economic stagnation and deflation. Today, the same plot features China. Notwithstanding both countries’ objectionable mercantilism, Japan and China had something else in common: They became victims of America’s unfortunate habit of making others the scapegoat for its own economic problems. Like Japan bashing in the 1980s, China bashing today is an outgrowth of America’s increasingly insidious macroeconomic imbalances. In both cases, a dramatic shortfall in US domestic saving spawned large current-account and trade deficits, setting the stage for battles, 30 years apart, with Asia’s two economic giants. When Reagan took office in January 1981, the net domestic saving ratestood at 7.8% of national income, and the current account was basically balanced. Within two and a half years, courtesy of Reagan’s wildly popular tax cuts, the domestic saving rate had plunged to 3.7%, and the current account and the merchandise trade balances swung into perpetual deficit. In this important respect, America’s so-called trade problem was very much of its own making. Yet the Reagan administration was in denial. There was little or no appreciation of the link between saving and trade imbalances. Instead, the blame was pinned on Japan, which accounted for 42% of US goods trade deficits in the first half of the 1980s. Japan bashing then took on a life of its own with a wide range of grievances over unfair and illegal trade practices. Leading the charge back then was a young Deputy US Trade Representative named Robert Lighthizer. ... And that’s where China assumes the role that Japan played in the 1980s. On the surface, the threat seems more dire. After all, China accounted for 48% of the US merchandise trade deficit in 2018, compared to Japan’s 42% share in the first half of the 1980s. But the comparison is distorted by global supply chains, which basically didn’t exist in the 1980s. Data from the OECD and the World Trade Organization suggest that about 35-40% of the bilateral US-China trade deficit reflects inputs made outside of China but assembled and shipped to the US from China. That means the made-in-China portion of today’s US trade deficit is actually smaller than Japan’s share of the 1980s. Like the Japan bashing of the 1980s, today’s outbreak of China bashing has been conveniently excised from America’s broader macroeconomic context. That is a serious mistake. Without raising national saving – highly unlikely under the current US budget trajectory – trade will simply be shifted away from China to America’s other trading partners. With this trade diversion likely to migrate to higher-cost platforms around the world, American consumers will be hit with the functional equivalent of a tax hike. Ironically, Trump has summoned the same Robert Lighthizer, veteran of the Japan trade battles of the 1980s, to lead the charge against China. Unfortunately, Lighthizer seems as clueless about the macro argument today as he was back then. In both episodes, the US was in denial, bordering on delusion. Basking in the warm glow of untested supply-side economics – especially the theory that tax cuts would be self-financing – the Reagan administration failed to appreciate the links between mounting budget and trade deficits. Today, the seductive power of low interest rates, coupled with the latest strain of voodoo economics – Modern Monetary Theory – is equally alluring for the Trump administration and a bipartisan consensus of China bashers in the US Congress. The tough macroeconomic constraints facing a saving-short US economy are ignored for good reason: there is no US political constituency for reducing trade deficits by cutting budget deficits and thereby boosting domestic saving. America wants to have its cake and eat it, with a health-care system that swallows 18% of its GDP, defense spending that exceeds the combined sum of the world’s next seven largest military budgets, and tax cuts that have reduced federal government revenue to 16.5% of GDP, well below the 17.4% average of the past 50 years. This remake of an old movie is disconcerting, to say the least. Once again, the US has found it far easier to bash others – Japan then, China now – than to live within its means. This time, however, the movie might have a very different ending.
China wouldnt have anything if it weren't for their IP theft. That is the dumbest article ive read so far. Probably written by someone at gunpoint in Beijing. Japan created numerous engineering and quality standards (ex. kaizen) that we still use today. China wouldnt be on the map if it werent for their uncanny ability to break the law and steal everyone's hard work.
lol https://asia.nikkei.com/Opinion/Trade-wars-lessons-from-the-1980s2 Where do we have seen this movie before.? "Just as today, there were concerns about industrial espionage; six Hitachi executives were arrested in an FBI sting relating to IBM technology. Fujitsu was blocked from acquiring Fairchild Computer on national security grounds, even though the company was French-owned at the time. By the end of the decade Japan had replaced the Soviet Union in public opinion as the number one threat to America." ... "On a trip to Detroit, Speaker of the House Tip O'Neill threatened to "fix the Japanese like they've never been fixed before." Democratic congressman Jack Brooks opined that the U.S. should have dropped four nuclear bombs on Japan, not just two."
A Robot Named 'Tappy': Huawei Conspired To Steal T-Mobile's Trade Secrets, Says DOJ https://www.npr.org/2019/01/29/6896...ed-to-steal-t-mobile-s-trade-secrets-says-doj A second Apple employee was charged with stealing self-driving car project secrets https://www.google.com/amp/s/www.th.../apple-self-driving-trade-secrets-china-titan China's Sinovel convicted in U.S. of trade-secret theft https://www.google.com/amp/s/mobile.reuters.com/article/amp/idUSKBN1FD2XL thats just a start
Sure who knows. As Trump would blame both sides are responsible after Charlottesville, both sides shirts are dirty. May be it is a start just like Hitachi executives arrest during Japanese trade war or another spectacular bulletproof starting evidence of WMD just before Iraq war.
Interesting article, but wrong on many levels. I have a deep respect for Japan and its culture despite its other shortcomings. It is nothing short of a miracle and amazing how Japan could pull off such mighty economic power in the 80s and 90s. The usable land mass is tiny in comparison to the US or China. The level of quality of products was unsurpassed and the innovation that was implemented was breathtaking. In the long term only America could parallel and exceed the level of innovation because of its diverse research and engineering base but also because of the cultural trait to strive to improve no matter what. Japan never had such diversification in its researchers and engineers. A breathtaking and inspiring culture and people even today. But, the article is wrong on several counts: Japan did not go through 3 decades of stagnation because it blinked in the Japan-US economic confrontation. The biggest problem was thar bad debt was held on corporate books and bank books for a very long time. Only later have bad debts been written off and restructured/securitized. It also went down precisely for the reason that while it innovated in a few key areas it copied and stole IP. When the US and Europe properly addressed that issue it made it that much harder for Japanese firms to compete. Next, the author wrongly claims the current American sentiment towards China is related to a low domestic savings rate. Bollocks. The negative sentiment is squarely justified by the unfulfilled commitments China made when it joined WTO. Add to that property theft and unfair trade practices. Those are the reason why US is stepping up and puts a stop to those practices and demands China implement its promises. Trade imbalances are not a problem in themselves, it just means there is an imbalance between supply and demand for goods and services. What is a problem is cheating, deceit, lies, unfair practices. US started a trade war with Japan because of dishonest trade practices of Japan, among the above listed, egregious price dumping. US did not start a trade war with today's Japan because Japan plays a fair game today and the fact that US runs a goods deficit with Japan is because Japanese don't find American goods that attractive but they like American services a lot better than Americans Japanese services. US also does not start a trade war with Germany despite the large deficit because Germany plays a very fair game. China deserves to be bashed because China plays an unfair and dishonest game. Its really that simple. This sounds much more like a political vendetta than an honest economic review or reflection of current state.
Almost completely agree. It's a very irrational article that completely ignores economic reality, and that by a Yale economics prof who worked for MS and should know better. Well he knows better but here is the perfect example why some economists and developers will never make good traders: they are blinded by their political and other convictions and blank out reality because they don't like someone or something. Where I give China a little more credit than you do is that China would still be an economic power without IP theft and unfair trade practices. But it would take China the same 40 to 50 years that it has taken Germany or Japan to rise from the ashes and grow to an economic power. Here China stole and cheated to take a short cut and that is the precise reason for the pushback.
Who knows? Dude, read the news other than CNN then you know. I am not American, never watched Fox, don't like Trump personally, but I look at reality. China cheats and steals and lies and does not fulfill its commitments of the WTO agreements. Read it, you find China's signature on the bottom. We all know unless we choose to be blind.
I have not said China did not steal IP, in fact in some of my previous posts I have mentioned IP issue with China is a legitimate concern. My statement there was both sides misrepresent just before any war (see my examples of WMD and Hitachi executives arrest and similarly numerous arrest of Canadian nationals in China and charging them with death penalty). Regarding Huawei, "Foreign affairs" well respected magazine as this to say: Issue here was not just IP theft, but spying for china and hence total ban https://www.foreignaffairs.com/articles/china/2019-01-30/huawei-pawn-trade-war "It is unusual for Western states to march in lockstep in this way, particularly where China is concerned. Just a few years ago, the U.S. allies now lining up to scrutinize China’s largest tech company ignored Washington’s pleas not to join China’s Asian Infrastructure Investment Bank. The current show of unity is all the more striking given that there is no smoking gun incriminating Huawei—no public evidence proving, say, that the company is rigging its hardware or spying on behalf of the Chinese government. To be sure, Huawei has previously been linked to the theft of intellectual property from Cisco and at least one case of compromised data involving the African Union headquarters in Ethiopia. The U.S. Justice Department's latest indictments paint a picture of a company that deliberately flouted sanctions law and stole technology from its business partners. But Western governments have yet to present detailed public evidence that Huawei has indeed been spying for China, and the company denies that it does so." .... The United States, for its part, should heed the difference between competing and merely whining. On the technological front, this means recognizing that Huawei will continue to be a major player in the global market for 5G infrastructure. Washington must move ahead swiftly on regulatory reforms to incentivize private-sector investment in the United States’ own 5G infrastructure. It must work with like-minded allies and partners to address cybersecurity vulnerabilities and protect strategically sensitive technologies without undermining the innovation ecosystem that gives rise to their development. The Trump administration should also avoid overstating its case against Huawei and the Chinese state. As bad as Huawei’s sanctions violations and its theft from corporate competitors may have been, that malfeasance should not be conflated with spying on behalf of the Chinese government. This distinction can be made without minimizing the security risks of embedding Huawei technology in 5G infrastructure. Similarly, there is little doubt that China has stolen intellectual property from abroad, but many other countries have done the same, and Washington needs to better explain how Chinese practices fundamentally differ in their scope, scale, and long-term impact on American economic and national security. U.S. officials should also be sensitive to the danger that friends and foes alike will interpret the timing of charges against a senior Huawei executive as geopolitical maneuvering rather than a legitimate, independent law enforcement action. That perception could undercut one of the “soft” advantages the United States has in any strategic competition: its deeply institutionalized commitment to the rule of law.
So in your eyes only when a company spies for its government is it liable to being banned in another country? When a company conducts egregious corporate theft of IP and spying on other companies for its own benefit then that company is justified in doing so and should be cleared to conduct business in other countries? I am not quite following your rationale here. Are the accusations and proof of corporate theft and spying not enough here even though it has not been proven that the company spied specifically for the Chinese state? Every sovereign country has the right to ban corporations that do not play by the rules, plain and simple. That is what the US is doing with Huawei. Whether Huawei spied for Chinese espionage services is secondary here. The primary reason is that Huawei violated multiple international trading sanctions that targeted Iran and other countries and Huawei stole IP and spied labs for its own benefit, all of which is illegal. That is why the daughter of Huawei founder was arrested in Canada. Not because Huawei was found to have spied for the Chinese state but because it circumvented and violated US sanctions on named countries. The daughter was an executive in charge of releasing money and funding for projects that violated those sanctions. I find all this pretty straight forward and making sense. You may dislike Trump but so far what they have done re Huawei is reasonable, measured, targeted and justified. US has to explain NOTHING how this investigation and ban differ in scope. Why? When an illegal immigrant is captured and put in detention and the case is made for his/her deportation nobody has to make a case of the scope how it differs with all the other illegal immigrants that have NOT been captured. There are laws and when an entity violated the laws then it is a violation and the entity has to expect to be prosecuted and punished to the fullest extent of the law. Just because other companies were not indicted makes zero difference and the US Justice Department does not owe anyone an explanation of the scope.