Tariffs seen as way to fight Chinese intellectual property theft

China is accusing Trump of using bullying tactics by imposing billions in tariffs on goods imported from the communist country, according to CBS News.

A spokesman for the Chinese Commerce Ministry said accusations of forced technology transfer and intellectual property theft “seriously distorted the history and reality.”

But Betsy McCaughey, writing at Townhall, notes that the tariffs are being called a theft tax, because the Chinese government policy has been to steal or extort American intellectual property. “China steals something between $225 billion to $600 billion worth of fashion designs, pharmaceutical formulas and new technologies from U.S. companies every year, according to the Commission on Theft of American Intellectual Property,” she writes.

Meanwhile, at The Wall Street Journal, Peter Navarro, an assistant to the president for trade and manufacturing policy and director of the White House National Trade Council, reports that American companies are being forced to accept technology transfers just to gain access to the huge Chinese market.

“In 2010, for example, General Electric formed a joint venture with the state-owned Harbin Electric to manufacture wind turbines,” he writes. “The venture ended after three years of sharing technology. As a result of deals like this — and at least one conviction of a Chinese wind-turbine maker for trade secret theft — Chinese firms’ share of the international wind turbine market rose from 9% to nearly 25% over the past decade.”

McCaughey says the Chinese apparently believe that “free market” means steal what you want. The Chinese government politely calls it “the assimilation and absorption of imported technology.”

“American Superconductor Corporation was almost put out of business, its stock value driven down 96 percent, when a Chinese wind turbine maker stole its technology and flooded the Chinese market with copies,” explains McCaughey.

Navarro points out a similar problem with solar energy. China’s theft of American technology has resulted it now having six of the top 10 producers of solar panels, including the top two, though it previously had no company in the top 10.

“If China continues to escalate this trade dispute rather than treat the U.S. fairly, Americans may finally wake up to an economic and national-security threat that the president has seen coming for decades,” Navarro concludes. “With its huge trade surplus with the U.S., China must know it has far more to lose in this trade dispute.”

All the news that fits the agenda

Flight from China greeted with fanfare and gushing headlines. (R-J pix)

Flight from China greeted with fanfare and gushing headlines. (R-J pix)

Talk about an orgy of unmitigated puffery. Break out the pompoms, bang the drums, shoot off Chinese fireworks and sing hosannas to the highest.

For nearly a week the Las Vegas newspaper has been filled to the brim with glowing headlines about the second coming, or rather the first coming — the first direct flight from Beijing to Las Vegas, and back again we presume.

The Friday headline was: “Inaugural Hainan Airlines flight from Beijing to Las Vegas lands at McCarran.” Isn’t there an old saw about safe landings not warranting newspaper headlines — “Plane doesn’t crash?” Where was the headline for the other 700 or so flights that safely landed that day?

Another headline and story that day gayly announced that cake, champagne and show performers from the Strip greeted the 300 or so Chinese tourists aboard that plane — less reporters, tourism touts and assorted hangers on. No cake and champagne for the other 40 million tourists who show up here each year? Where’s your sense of fairness?

Parisian Macau opened in September. (R-J pix)

Parisian Macau opened in September. (R-J pix)

The other five or so stories about this auspicious occasion told newspaper readers that local tourism officials are hungry for a wave of flights from China, Las Vegas is being marketed as less than sinful, tickets for the junket were going on sale, many in the Chinese community await investment opportunities, and the pent up demands for Chinese travel to Las Vegas is a good thing. No editorializing in any of that.

Then there was the Beijing dateline from one of the paper’s reporters who apparently took the flight and also took dozens of photos and apparently shot cell phone video to post online telling stereotypical tales about the stereotypical Chinese tourist, as well as the dozens of photos from an actual photographer when the plane actually arrived in full glory and regalia.

The paper gushed more ink than a geyser on this plane load of Chinese tourists.

You’d almost think the newspaper’s owner had some kind of interest in Chinese tourism or had a stake in stoking the egos of Chinese officials who have the power of life or death over his casinos in that country. But none of the stories carried the customary disclaimer about the paper’s owner also owns a chain of casinos, including a couple in Macau, China, so that mustn’t be the case.

In 2014 Chinese officials cracked down on junkets to Macau and money laundering, causing casino revenue there to plummet more than 34 percent in 2015. Wouldn’t want a repeat of that, now that biz is bouncing back and revenues are seeping back into casino owners’ pockets.

Then to make sure the story played out to the last gasp, today a front page story on the “official” opening of the tiny, 200-room, Chinese-themed Lucky Dragon casino just off the Strip has a passing mention of the airline’s inaugural flight. So far the slow-motion opening of the Lucky Dragon, including a feature on how to serve tea Chinese-style, has gotten more coverage than the grand opening of the paper’s owner’s latest pleasure palace in Macau, China.

I hear the paper is planning a Mandarin edition soon, replete with quotes from Chairman Mao, who immediately outlawed gambling in China when he took over in 1949, such as, “The socialist system will eventually replace the capitalist system; this is an objective law independent of man’s will. However much the reactionaries try to hold back the wheel of history, eventually revolution will take place and will inevitably triumph.”

All the news that fits, or fits the agenda.

Photo-op in Beijing. (R-J puff pix)

Photo-op in Beijing. (R-J puff pix)





How has that tariff thing worked out in the past?

President-elect Donald Trump continues to bluster about foreign trade and how we are being raped by the trade deficit with China.

He has proposed to renegotiate most current trade deals and impose a tariff on goods from China of up to 45 percent and 35 percent on goods from Mexico. He’s threatened to pull out of the World Trade Organization.

From the those-who-do-not-remember-history file comes this from Murray Rothbard, the late S.J. Hall Distinguished Professor of Economics at the University of Nevada, Las Vegas, an excerpt from America’s Great Depression:

In mid-1930, another chicken born in 1929 came home to roost. One of Hoover’s first acts upon becoming President was to hold a special session on tariffs, beginning in the spring of 1929. Whereas we have seen that a policy of high tariffs cum foreign loans was bound to hurt the farmers’ export markets when the loans tapered off, Hoover’s answer was to raise tariffs still further, on agricultural and on manufactured products. A generation later, Hoover was still to maintain that a high tariff helps the farmer by building up his domestic market and lessening his “dependence” on export markets, which means, in fact, that it hurts him grievously by destroying his export markets. Congress continued to work on a higher tariff, and finally reported a bill in mid-1930, which Hoover signed approvingly. In short, it was at a precarious time of depression that the Hoover administration chose to hobble international trade, injure the American consumer, and cripple the American farmers’ export markets by raising tariffs higher than their already high levels. Hoover was urged to veto the Smoot–Hawley Tariff by almost all the nation’s economists, in a remarkable display of consensus, by the leading bankers, and by many other leaders. The main proponents were the Progressive bloc, the three leading farm organizations, and the American Federation of Labor.

No one had advocated higher tariffs during the 1928 campaign, and Hoover originated the drive for a higher tariff in an effort to help the farmers by raising duties on agricultural products. When the bill came to the House, however, it added tariffs on many other products. The increased duties on agriculture were not very important, since farm products were generally export commodities, and little was imported. Duties were raised on sugar to “do something for” the Western beet-sugar farmer; on wheat to subsidize the marginal Northwestern wheat farmers at the expense of their Canadian neighbors; on flaxseed to protect the Northwest farmers against Argentina; on cotton to protect the marginal Imperial Valley farmer against Egypt; on cattle and dairy products to injure the Canadian border trade; on hides, leather, and shoes; on wool, wool rags, and woolen textiles; on agricultural chemicals; on meat to hamper imports from Argentina; on cotton textiles to relieve this “depressed industry”; on velvets and other silks; on decorated china, surgical instruments, and other glass instruments; on pocket knives and watch movements. The tariff rates were now the highest in American history.

The stock market broke sharply on the day that Hoover agreed to sign the Smoot–Hawley Bill. This bill gave the signal for protectionism to proliferate all over the world. Markets, and the international division of labor, were hampered, and American consumers were further burdened, and farm as well as other export industries were hindered by the ensuing decline of international trade.

One prominent protectionist drive was put on by the silver bloc. In February, the mining interests suggested an international monetary conference to raise and then stabilize silver prices, as well as to levy a tariff on silver. The resolution was put through the Senate in February, 1931, but the State Department could not interest foreign governments in such a conference. Main supporters of this price-raising scheme were the Western governors, at the behest of the American Silver Producers’ Association, Senators such as Key Pittman of Nevada and Reed Smoot of Utah, J.H. Hammond, a mining engineer, Rend Leon, a New York banker, and F.H. Brownell, President of the American Smelting and Refining Company.

During the second half of 1930, production, prices, foreign trade, and employment continued to decline. On July 29, Hoover called for an investigation of bankruptcy laws in order to weaken them and prevent many bankruptcies — thus turning to the ancient device of attempting to revive confidence by injuring creditors and propping up unsound positions. In August, it was revealed that merchant shipping construction had swelled from 170,000 tons in July, 1929, to 487,000 tons in July, 1930 — due to Federal subsidies. On September 9, Hoover took an unusual step: to relieve the unemployment problem, and also to help keep wage rates up, the President effectively banned further immigration into the United States, and did so through a mere State Department press announcement. The decree barred all but the wealthiest immigrants as “public charges,” in a few months reducing immigration from Europe by 90 percent.

Interestingly enough, Hoover’s high-handed action came in defiance of previous Congressional refusal to agree to his proposal to cut immigration quotas in half, and it also came after the Senate had rejected a bill to suspend all immigration except by relatives for five years, offered by Senator Hugo Black (D., Ala.). Typical of the restrictionist, wage-raising arguments for blocking immigration was the charge of Senator Black that “foreign immigration has been utilized by the big business interests of the country as a direct weapon to break down the price of wages of the people of the land.” As might have been expected, William Green warmly endorsed Hoover’s stand.

Reducing the labor force as a “cure” for unemployment is similar to “curing” a surplus of a certain commodity by passing a law prohibiting anyone from selling the product, and anticipated Hitler’s “cure” for unemployment by forcibly sending married women back to the home. Hoover also records that he accelerated the deportation of “undesirable” aliens, again helping to ease the unemployment picture. He deported sixteen to twenty thousand aliens per year. As a consequence, while the immigration law had already reduced net immigration into the United States to about 200,000 per year, Hoover’s decree reduced net immigration to 35,000 in 1931, and in 1932 there was a net emigration of 77,000. In addition, Hoover’s Emergency Committee on Employment organized concerted propaganda to urge young people to return to school in the fall, and thus leave the labor market.

Rothbard concludes:

What was the trouble? Economic theory demonstrates that only governmental inflation can generate a boom-and-bust cycle, and that the depression will be prolonged and aggravated by inflationist and other interventionary measures. In contrast to the myth of laissez-faire, we have shown in this book how government intervention generated the unsound boom of the 1920s, and how Hoover’s new departure aggravated the Great Depression by massive measures of interference. The guilt for the Great Depression must, at long last, be lifted from the shoulders of the free-market economy, and placed where it properly belongs: at the doors of politicians, bureaucrats, and the mass of “enlightened” economists. And in any other depression, past or future, the story will be the same.

China is already threatening to counter a tariff by curbing sales of the iPhone in China, along with automobiles and airplanes.

And what about Trump’s call to spend money on infrastructure? Didn’t Obama try that without success?


More solar power pipe dreams?

The Interior Department is pushing ahead with plans to pave over the desert north of Las Vegas with more than 3,000 acres of solar panels, according to the Las Vegas newspaper.

Three companies are in the running to erect panels on federal public land in the Dry Lake Solar Energy Zone near Interstate 15 and Highway 93 — NV Energy on 660 acres with 150 megawatts, First Solar on 1,700 acres with 200 megawatts and Invenergy on 715 acres with 130 megawatts.

The story says the three projects could generate enough energy to power 120,000 homes. The question is: Where are those homes?

Interior official shows map of solar energy zone. (R-J photo)

Perhaps California needs more solar power to meet its renewable energy requirement of 33 percent of all power by 2020, but Nevada is on track to cover its legislatively dictated 25 percent by 2025. Those standards are completely artificial and ignore the demands of the market or the cost.

In fact, the PUC turned down NV Energy’s bid to build a 200-megawatt photovoltaic facility on the Moapa Indian reservation because it does need the power. The company only needs 54 megawatts and that can be much more cheaply acquired by building or buying standard combustion turbine technology at about a fifth of the cost of solar infrastructure.

If you build it, who will buy it? And at what price?

p.s. Speaking of clean energy, all the papers made a big deal of China cutting a deal with Obama to cut carbon emissions, but you won’t read much about China balking at actually allowing monitoring to see if they are living up to the deal. Told you so.



Obama to China: We’ll sacrifice and pay higher power bills and you will do, well, nothing whatsoever

Obama at a press conference (Getty Images)

I wouldn’t trust Obama to negotiate with trick-or-treaters on Halloween night. The first kid would get all the candy.

That’s what he did with his grand deal with China to cut carbon dioxide output. The U.S. agrees to cut carbon by up to 28 percent of our 2005 level by 2025, while China agreed to stop increasing its carbon emissions by 2030.

But Investor’s Business Daily reports that Lawrence Berkeley National Laboratory forecasts that China’s emissions will peak in 2030. So, China has agreed to do nothing whatsoever.

Never mind there has been no global warming in 18 years despite what all the computer models predicted would be the result of rising carbon output.

The Wall Street Journal noted that under this nonbinding agreement, China promises “to intend to achieve the peaking of CO2 emissions around 2030,” which basically describes the status quo.

Of course, Nevada senior Sen. Harry Reid, D-Green cronies, thought it was a good deal:

“The historic announcement by President Obama and President Xi Jingping of China is exactly what is needed to ensure that America’s efforts to clean up our energy supply are replicated around the world.  As I’ve said in the past, we cannot wait to address climate change and strengthen our nation’s resilience to extreme weather and climate impacts. I hope this agreement will spur other countries to join with us in confronting climate change.”

As long as there is more loot for his renewable energy company contributors, all else is naught.

This deal merely shows that Obama is a pushover who will agree to anything in order to be able to say he negotiated a deal. Hello, world, here comes a sucker.

IBD graphic