While some in Washington are urging American businesses to cut ties with Communist China, trade between the two nations has never been more robust. Yet storm clouds are emerging on the horizon in the form of Chinese theft of U.S. technology and the specter of an invasion of Taiwan, heightening scrutiny of companies by consumers. A chorus of congressional voices is insisting that now is the time for corporate America to wind down its engagements with Chinese companies. One is Representative Michael Waltz, who lamented on Fox News: “We’re drunk on Chinese dollars from Wall Street to the NBA to academia to our politicians across the board.”Demands to “defund” China follow an unprecedented joint warning issued last week by the heads of the Federal Bureau of Investigation and British intelligence that highlighted the country’s acquisition of foreign technology through espionage and theft. “China poses a far more complex and pervasive threat to businesses than even the most sophisticated company leaders realize,” the FBI director, Christopher Wray, cautioned.“Denouncing China as a rival has become somewhat fashionable,” the Asia director for the human rights group Amnesty International, Nicholas Bequelin, told the Sun. One recent action by the Biden administration was banning the importation of goods manufactured in Xinjiang, China, following reports of human rights abuses against Uyghur Muslims in the region. However, the reality of American commercial activity has diverged from the sharp words that characterize political discourse on China. “The two economies are still joined at the hip,” Mr. Bequelin said. Trade between the superpowers is at an all-time high, with China serving as the U.S.’s largest commercial partner behind only Canada and Mexico, and reaping the rewards of major venture capital investments from Wall Street. To take just one high-profile example, Apple’s production volume in China has steadily increased in the past 10 years, with 90 percent of its products now manufactured in that country, according to a market and consumer data company, Statista. “You don’t want to be dependent on your rival,” Mr. Bequelin said. “You want to limit exports of technology that could be, on the face of it, commercial, but could be turned into military technology that could help China gain military advantage.”The American economy as a whole is reliant on Chinese production of ammunition, antibiotics, cancer medications, and renewable energy sources, the last of which has increasing importance given President Biden’s push toward a carbon-free economy. “Companies have to take into account the potential human rights concerns from the public, but it’s not going to dictate how they operate,” Mr. Bequelin said. Although average consumers may be sensitive to products with a tight association to Xinjiang, he added, they cannot be expected to complete due diligence on the production methods behind all of their purchases.The risk of a geopolitical crisis in China might force corporate America to rethink its financial investments and supply chain dependencies, though, and begin to plan for a world where America’s and Communist China’s futures disentangle. A military conflict in the South China Sea and the Taiwan strait — home to 60 percent of global maritime trade and essentially owned by China — would disrupt global supply chains at a level unforeseen by American companies, even during the Covid-19 pandemic, a founder of a political party that campaigns for greater democracy and human rights in Hong Kong, Dennis Kwok, told the Sun. “Think Russia-Ukraine and times it by 100,” Mr. Kwok said, recalling how India, Israel, the United Arab Emirates, Mexico, Serbia, and Turkey, among others, chose not to impose sanctions on Russia after it invaded Ukraine — in part due to an overwhelming dependence on Russian oil.He said that while Communist Chinese leaders are prepared to deal with Western sanctions, they are also betting that “the West will in effect roll over because of the dependency on the Chinese economy,” Mr. Kwok said. Even as the threat of Chinese supremacy has long been a point of bipartisan consensus, signs have emerged that the Biden administration is considering walking back much of the firm stance pursued by President Trump. As a whole, American foreign policy has failed to account for intensifying political instability within China and antagonism toward the U.S. Mr. Trump overturned the decades-long U.S.-China “love affair,” Mr. Bequelin said, in which politicians favored relations with China. He imposed a “China Initiative” program to prevent spying by its government and a battery of tariffs on Chinese imports. The Justice Department under President Biden replaced this program with a broader approach to counter “nation-state threats” after officials were concerned that it stoked anti-Asian bias. Mr. Biden is considering dropping levies on certain Chinese goods in an effort to ease inflation, which would effectively end Mr. Trump’s trade war.“If you want to have a successful foreign policy, it has to be based on facts and not on the ideological flavor of the month,” Mr. Bequelin said.Given this oscillating governmental stance, the responsibility to combat Chinese threats might rest with corporate America, for the sake of both economic viability and national security.Mr. Kwok urges companies to stress-test their existing operations in China and redraft contracts to account for a range of geopolitical crises, such as a physical blockade of Taiwan, a trade embargo by Chinese authorities, a major cybersecurity attack, or damage to undersea internet cables in the region. “We need to broaden our imagination and plan for different scenarios,” he said.“You don’t solve these problems, you manage them,” Mr. Bequelin added. “The U.S. has done a very poor job of managing this essential relationship for the U.S., but also for the world.”
