When I was in grade school in the '50s, we were taught that communism was anti-democracy
and anti-capitalism, and that its believers
wanted to take over the world.
After the end of the cold war in the early
'90s, the communist countries developed
their own form of one-party controlled
capitalism who wanted to sell stuff to
the U.S. And then, almost like magic,
American businesses and the government
decided they were okay being business
partners, and began making investments
in communist countries. I was bewildered
by this sudden change and wondered why
they were no longer considered a threat.
In July 2008, Harold Myerson wrote an
article that said that “American businesses have realized that the problem with
communism wasn’t that it was un-demo-cratic, but that it was anti-capitalist, and
that once communism was integrated into
the world capitalist system, its antipathy
towards democracy wouldn’t be a bad
thing but would actually be good.” This
is the political logic that now supports
American involvement with China.
I would like to make an argument that
this is simply a rationalization for the large
companies and banks to make higher profits, but that it ignores the fact that China
and other communist countries don’t play
by the same rules and are a long term
threat to the U.S. in many ways. More
importantly, they do not play the game
with the same morals, values, and ethics
that describe most American businesses.
They are our number one adversary in
business and have slowly become a threat
to our national security. To replace us as
the number one economy, they are going
to have to get a larger share of oil and
energy; a bigger share of electronics; and
buy, copy, or steal our advanced technologies. American businesses and the government know that China wants to become
the number one economy in the world and
we simply ignore the fact that the Chinese
have shown they will do whatever it takes
(legal or illegal) to achieve their goals.
Here are some examples:
Cyber Hacking – By now most citizens
should know about the cyber hacking
problem because it is continually in the
news. It is pretty well known that Chinese
hackers have been able to hack into the
databases of large banks, corporations, and
government agencies. But it is less known
that the Chinese espionage efforts have
also been successful in getting information
on America’s advanced weapon systems.
Much of the report by the Defense Science
Board is confidential, but The Washington
Post gained access to some information and
revealed that the advanced Patriot missile
system, the Army’s THAAD defensive bal-
listic missile system, and the Navy’s Aegis
ballistic missile defense system were com-
Buying U.S. Businesses – Another
strategy the Chinese actively use to get
access to American technologies is buying
American businesses in key industries
they have targeted. They are very interest-
ed in telecommunication technology: Two
very large Chinese telecommunication
companies, Huawai and ZTE, have been
trying to buy into U.S. markets but, so far,
have been stopped by the government.
The government committee investigating
the two companies warned that malicious
hardware or software implants in Chinese
manufactured telecommunication com-
ponents and systems could allow Beijing
to shut down or degrade critical national
security systems in times of crisis or war.
Military Supply Chain Vulnerabilities –
A report from retired Brigadier General
John Adams found that “U.S. National
Security and the health of the nation’s
defense industrial base are in jeopardy
because of an over reliance on foreign
suppliers for defense materials.” The report
• The dependence on one Chinese supplier for the solid rocket propellant
butanetrial used in our Hellfire missiles.
• The U.S. imports 91 percent of the rare
earth element Lanathum, which is used
in night vision systems for U.S. fighters.
• The manufacture of lithium ion batteries has moved offshore to foreign
• High tech magnets were originally
developed in the U.S. and are used
in missiles, fighters, and tanks. China
now produces 75 percent of the NdFeb
magnets used in our military systems.
Chinese Mindset - The Chinese are
going to exhaust the productivity they
have made from importing technology,
buying technology, forcing companies
to give them technology, and copying
technology. They will have to rely on their
own R&D efforts and so far they have not
proved very innovative on their own.
But to sustain their growth and build up
their military, they need more electronics,
aerospace technology, military designs,
and advanced technologies. I think they
will step up their efforts to get what they
need, however they have to do it.
So far neither the administration nor
Congress seems to want to punish China
for their unethical and illegal strategies.
They seem to want to maintain a status quo that is not confrontational with
their largest business partner. I think the
Chinese view the American government as
a weak toothless tiger that publicly whines
a lot, but is afraid to take them on and
deal with World Trade Organization violations or currency manipulation.
The big question is, who benefits
the most in maintaining a status quo?
Certainly all of the big multi-national companies who have investments in China do
not want to rock the boat or do anything to
upset the fragile arrangements with China.
Their lobbyists spend millions of dollars
every year on Congress to continue to
get their way. The administration shies
away from making hard decisions because
they say they need the cooperation of the
Chinese in foreign affairs such as North
Korea, Syria, and Iran.
Perhaps the government overreacted
to communism and they were not the
blood-thirsty, cruel, imperialist countries
that were portrayed. But they are still a
one party, non-democratic, authoritarian
state that makes its own rules to achieve
its objectives. And we seem to be willing
to ignore the reality that for many authoritarian cultures and dictatorships, cheating,
corruption, spying, and getting around the
law are built into the culture.
In fact, one could say that by throwing
out their old methods and participating in
a world commerce using their version of
communist capitalism, they are now winning the war. By forcing America into trade
deficits where they have a huge export
advantage, stealing our military designs
and technologies, and then loaning us the money to keep the
game going, they are succeeding in their goal of surpassing
us as the number one super
power in the world.
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The China “Rules” of Business