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May 20, 2020

Trump’s First Round of Reckoning for China COVID Cover-Up

The president has taken a more aggressive stance against Xi Jinping’s regime.

For the last three years, President Donald Trump has engaged in a solo good cop/bad cop routine, at times praising Chinese dictator Xi Jinping (as when discussing the U.S.-China trade agreement) and other times scolding China for its unfair trade practices and human-rights abuses. This is all part of what national-security expert James Carafano describes as Trump’s strategy of “making across-the-board military, diplomatic, economic challenges to Beijing where they are impinging on vital U.S. interests.”

However, with clear evidence of China’s willfully negligent role in allowing COVID-19 to become a global pandemic, resulting in 1.5 million infections and nearly 90,000 deaths in the U.S. alone, President Trump’s demeanor toward China has become decidedly hostile. Vowing to hold the Communist Chinese Party (CCP) accountable for the public-health crisis and the ensuing economic devastation, President Trump has begun putting some bite into those criticisms.

First, he directed the Thrift Savings Plan (TSP) oversight board to halt all investments in Chinese companies. The TSP is a retirement savings plan for federal civil-service employees and military members. Trump’s directive blocks more than $40 billion from being invested in China.

Far more damaging to China, however, is President Trump’s decision last Friday to cut off Chinese tech company Huawei from access to global chip suppliers by amending a rule to require foreign companies using U.S. chip-making equipment to obtain a special license before selling certain chips to Huawei or any affiliates. Ostensibly “employee owned,” Huawei is effectively controlled by the CCP.

As a direct result of the rule change, Taiwan Semiconductor Manufacturing (TSMC), the world’s largest manufacturer of advanced microchips, announced it is no longer accepting new orders from Huawei. This is a significant blow to Huawei, the world’s second-largest smartphone manufacturer and the company vying for global domination of the emerging 5G market. Were China to control 5G networks, it could engage in widespread electronic espionage and disruption of other nations’ IT infrastructure. Huawei has already been accused of such espionage, which it denies.

Earlier this year, Attorney General Bill Barr warned of the threat posed by Huawei. “If the Industrial Internet becomes dependent on Chinese technology, China would have the ability to shut countries off from technology and equipment upon which their consumers and industry depend,” he argued. “The power the United States has today to use economic sanctions would pale by comparison to the unprecedented economic leverage we would be surrendering into the hands of China.”

Barr continued, “Within the next five years, 5G global territory and application dominance will be determined. The question is whether, within this window, the United States and our allies can mount sufficient competition to Huawei to retain and capture enough market share to sustain the kind of long-term and robust competitive position necessary to avoid surrendering dominance to the Chinese.”

This sentiment was bluntly seconded by Senator Ben Sasse (R-NE), who stated, “The United States needs to strangle Huawei. … Modern wars are fought with semiconductors, and we were letting Huawei use our American designs. This is pretty simple: Chip companies that depend on American technology can’t jump into bed with the Chinese Communist Party.” Former UN Ambassador Nikki Haley asserted, “China will lose their bucket over this move. It is hands down the right move for us in terms of national security.”

Last month, the FCC began shutting down U.S.-based operations of three Chinese state-owned telecommunications companies due to pervasive risks to national security.

President Trump also signed an executive order last week facilitating domestic production of “strategic supplies” needed to deal with current and future pandemics, a wise move after China hoarded such supplies as the Wuhan pandemic spread — and after China threatened to cut off U.S. access to life-saving drugs. The U.S. is heavily dependent on China for such supplies.

For its part, China is not taking these actions lying down. In response to President Trump’s moves, China threatened to stop purchasing planes from aerospace giant Boeing. The CCP also threatened to place American companies like Apple, Qualcomm, and Cisco on an “unreliable entities” list, imposing restrictions on them and launching an “endless series” of investigations meant to cripple operations and shake investor confidence.

China has also threatened to issue new regulations designed to debilitate small U.S. firms that are heavily dependent on Chinese companies, serving as a “‘first-level’ warning” to the U.S. against imposing trade restrictions.

The Trump administration has openly discussed other possible punitive and retaliatory measures, including additional tariffs, but the reality is that, due to the sheer volume of U.S. debt held by China and the heavy intertwining of the U.S. and Chinese economies, this is of necessity a long-term, strategic battle, requiring careful maneuvering to punish China while doing minimal harm to U.S. interests.

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