Seven steps to curb China’s ‘seven deadly sins’
With greater courage than demonstrated by past administrations, the White House has called out China for “seven deadly sins”: theft of intellectual property, forcing technology transfers, hacking, dumping, subsidizing, importing fentanyl and currency manipulation.
For me, this is personal. Six of these seven factors have cost 3.4 million Americans their jobs between 2000 and 2005. My company, AVG Advanced Technologies, was the sixth-largest manufacturer of printed circuit boards (PCBs) and among the top 20 manufacturers of printed circuit board assemblies (PCBAs) in the U.S. My colleagues and I watched as our manufacturing sectors shrank 95 percent. Ninety percent of smaller factories had to close their shops; larger companies moved to China. Fortunately, mine was a diversified company. Others, however, were unable to withstand the assault.
Along with the Americans who lost middle-class livings while the manufacturing base eroded, we witnessed the heartbreaking decline of the communities that sustained them. Untouched, of course, were the political elite who argued that the job killer was not China but automation.
Reality for those of us on the ground is different:
My industry alone lost over 500,000 direct manufacturing jobs and another million-and-a-half indirect jobs, and thousands of business owners in other industries struggled through sleepless nights, knowing only too well that while the narrative coming from the Ivory Tower offered protection to the political class, it was cold comfort to those on the front line — those who knew, such as economist Susan Houseman at the Upjohn Institute, that automation actually had very little to do with the job losses.
In truth, China was waging an economic assault on America’s manufacturing base, deliberately killing my industry by subsidizing their PCB and PCBA manufacturers at one-third U.S. market prices and buying off more than $20 billion worth of idle capital equipment at pennies on the dollar. From their perspective, it was brilliant — particularly if U.S. politicians were going to stand idly by, allowing China to achieve its stated and ongoing strategy to dominate the global market by 2049, the 100th anniversary of the Communist Revolution.
President Trump understands this. He knows there is only one way to bring back the jobs that have been lost: We must negotiate with the same deliberate objective that has driven their success. Toward this end, we must do the following:
- Place tariffs on all imports from China for six months to establish a new baseline and demonstrate America’s resolve — all means no exceptions, particularly finished goods.
- After six months, invite them to rejoin negotiations.
- President Trump should demonstrate his earnestness with a concession on 10 percent of the goods imported, a good-faith move to show Beijing that we will concede in some areas while retaining our right to protect long-term manufacturing.
- All negotiations should include manufacturing experts. Our biggest mistake in trade negotiations is that we do not have these experts on the negotiating table. Lawyers are great, and are needed, but you can be assured that China has their best manufacturing minds on the table.
- The manufacturing experts will know what makes sense for both parties to be happier.
- Manufacturing experts will focus on how to bring back the high-tech manufacturing jobs by picking the proper Harmonized System codes to tariff — the standardized names and numbers to classify traded products — not for the benefit of Wall Street and their quarterly reports, but for long-term manufacturing renaissance in America. Some Silicon Valley CEOs will complain that their costs will go up, but that is quite minor compared to the overall growth of American economy. When America reduces its trade deficit and budget deficit, every American prospers.
- The balance of 90 percent should be very carefully scrutinized, once again not solely by lawyers and economists but also by manufacturing experts.
This process will help Beijing understand that, while America will be fair, it has every right to compete aggressively. In time, as the president has indicated, the tariffs could be relaxed, perhaps entirely. However, China would then know how serious we are about protecting our interests, the welfare of our families, and our right and willingness to reimplement these more strident measures to counter its seven deadly sins.
Shalabh “Shalli” Kumar is the founder of the Republican Hindu Coalition and the retired chairman and CEO of AVG Advanced Technologies. He also is the founder and chairman of the National Indian American Public Policy Institute (NIAPPI) and chairman of Indian American Advisory Council of House Republican Conference, which advises Congress on legislation important to Indian Americans and India. Follow him on Twitter @iamshalabhkumar.