John Bolton: U.S. Won't 'Turn A Blind Eye' To China's Trade Practices

Dec 6, 2018
Originally published on December 6, 2018 6:48 pm

The arrest and possible extradition of a Chinese business executive highlights ongoing trade tensions between the U.S. and China that national security adviser John Bolton says will be a major focus of negotiations over the next three months.

Those tensions contributed to another roller coaster day on Wall Street. The Dow Jones Industrial Average was down more than 700 points on Thursday, but recovered to close down less than 80 points. That followed a 799 point drop in the Dow on Tuesday.

Meng Wanzhou, chief financial officer at China's Huawei Technologies, was arrested in Canada Saturday at the request of U.S. authorities and faces possible extradition to the United States. In an interview with NPR's Steve Inskeep, Bolton declined to address the reasons for her arrest, but said the U.S. has long been concerned with what it views as her company's theft of technological know-how.

"You should not turn a blind eye when states, as a matter of national policy, are stealing intellectual property from their competitors," Bolton told NPR's Morning Edition. "Huawei is one company we've been concerned about. There are others as well."

Huawei is one of the world's leading producers of smartphones and telecommunications equipment. Meng is the daughter of the company's founder. She's expected to appear for a bail hearing in Vancouver on Friday. The Justice Department also declined to comment on the reason for Meng's arrest.

Cease-fire?

She was detained the same day President Trump and Chinese President Xi Jinping held a working dinner in Buenos Aires, Argentina.

The two leaders emerged from that meeting signaling a cease-fire in their trade war. Trump agreed to hold off on additional tariffs on Chinese imports for 90 days while negotiations continued over China's trade practices.

"The main thing is to protect American jobs and American companies from the unfair treatment that they've received at the hands of the Chinese government," Bolton said. "They're not beating other countries in fair competition. They're stealing from them."

Vice President Pence also sounded a warning about China's growing assertiveness in a speech this fall to the Hudson Institute.

"America had hoped that economic liberalization would bring China into a greater partnership with us and with the world," Pence said. "Instead, China has chosen economic aggression, which has in turn emboldened its growing military."

Bolton generally shares those hawkish views. But he stressed the U.S. is not trying to limit China's economic growth.

"I don't think national security requires that at all," Bolton said. "What I think national security does require is that whatever economic growth China is blessed with, it gets by playing by the rules."

He reiterated the vice president's skepticism that prosperity would automatically lead to political change in China.

"I've heard going back years: 'Just let the Chinese economy grow a little bit and you'll see democracy spread all through the country,' " Bolton said. "We know today that connection is far from certain."

"I am a Tariff Man"

Financial markets initially welcomed the Trump-Xi cease-fire, with stocks rallying on Monday. But doubts soon crept in that it would last, especially after Trump tweeted his support for tariffs on Tuesday.

"I am a Tariff Man," Trump wrote. "When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs."

Indeed, Trump's tariffs on Chinese imports cost American businesses and consumers $2.2 billion in October, the first month in which those tariffs were fully in effect, according to an analysis of U.S. Census data by the Trade Partnership, an economic research firm.

"Americans are paying these taxes and they're paying more than ever before," said former Rep. Charles Boustany, R-La., who serves as spokesman for an advocacy group, Tariffs Hurt the Heartland.

Boustany notes tariffs directed at China tariffs did little to discourage imports or encourage domestic production, but retaliatory tariffs imposed by China have reduced U.S. exports. Imports from China subject to tariffs increased 2 percent in October, while exports subject to China's retaliatory tariffs plummeted 42 percent.

When combined with levies on steel, aluminum and other imports, the total price tag for Trump administration tariffs was $2.8 billion in October. That pushed the federal government's monthly tariff revenue to a record $6.2 billion.

Rules of engagement

Tariffs could go even higher if the U.S. and China fail to reach agreement on the sticky issues surrounding intellectual property and forced technology transfer. Bolton said business people are right to be worried.

"What prudent people should do is look at the way China functions and ask themselves whether trade and investment with an economy that takes advantage of its trading partners and puts their intellectual property at risk is something they want to engage in," he said.

Bolton also expressed skepticism about North Korea's willingness to abandon its outlawed nuclear program, even as he advocates for a second face-to-face meeting between the president and Kim Jong Un.

"President Trump is trying to give the North Koreans a chance to live up to the commitments they made at the Singapore summit," Bolton said. "He's held the door open for them. They need to walk through it."

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AILSA CHANG, HOST:

This was another roller coaster day on Wall Street fueled in part by trade tensions between the U.S. and China. The catalyst today - news that a high-ranking Chinese executive was arrested in Canada at the request of U.S. authorities. The arrest took place on Saturday just as President Trump was set to meet with Chinese President Xi Jinping. The two leaders emerged from that meeting talking about a cease-fire in their trade war. But the business community seems to be nervous that the truce is not going to hold.

NPR's Scott Horsley joins us now. Hey, Scott.

SCOTT HORSLEY, BYLINE: Hi, Ailsa.

CHANG: So tell us about this Chinese businesswoman who was arrested over the weekend in Canada.

HORSLEY: Her name is Meng Wanzhou. She's the chief financial officer of a big Chinese telecom company called Huawei. They're one of the biggest manufacturers in the world of smartphones and telecom networking equipment. Meng is facing possible extradition to the U.S., but we're not exactly sure why. The Justice Department isn't talking about it. Neither is the White House. But national security adviser John Bolton did speak to Morning Edition today. And he said Huawei's one of the Chinese companies the administration's been concerned about. They're suspected of stealing their competitors' technology. And that's at the heart of the U.S.-China trade dispute.

JOHN BOLTON: Whether you're a free trader or not, but maybe particularly if you're a free trader, you should not turn a blind eye when states as a matter of national policy are stealing intellectual property from their competitors.

HORSLEY: And you can hear more of that John Bolton interview on Morning Edition tomorrow. That's also when Ming is due to face a bond hearing in Vancouver.

CHANG: OK, so news of this arrest broke late Wednesday. And it seems to have rattled financial markets. Why?

HORSLEY: Yeah, at one point today the Dow was down more than 700 points. It largely recovered and ended the day off less than 80 points. But everybody's a little bit nervous, especially after that nearly 800-point drop we had on Tuesday.

CHANG: Yeah.

HORSLEY: Remember, Ailsa; we started out this week, everyone was kind of breathing a sigh of relief. President Trump had had this meeting with President Xi over the weekend. He announced he was going to hold off on boosting tariffs on Chinese imports from 10 to 25 percent while trying to hammer out a deal to protect American technology. As the week has worn on, though, that sigh of relief has given way to more anxiety that the trade truce isn't going to last. And the arrest of this high-ranking Chinese executive just adds to that.

CHANG: So what is President Trump saying about all this latest news?

HORSLEY: He has not said anything about Meng's arrest, but he did contribute to the stock selloff on Tuesday when he tweeted that he wanted to make a deal with Xi but that if they couldn't, tariffs would be going up. And he added for emphasis, quote, "I am a tariff man." That tweet echoed something Trump said last week shortly before his meeting with President Xi.

(SOUNDBITE OF ARCHIVED RECORDING)

PRESIDENT DONALD TRUMP: I think we're very close to doing something with China, but I don't know that I want to do it because what we have right now is billions and billions of dollars coming into the United States in the form of tariffs or taxes.

HORSLEY: Now, he's right that billions of dollars are flowing into the U.S. Treasury, but it's mostly money that's already in the United States. It's coming from American businesses and consumers. That's who typically pays these tariffs. And we're starting to get some real data on just what that's costing, what the price tag of those tariffs is. There's an advocacy group called Tariffs Hurt the Heartland that's been crunching census data numbers. And we just got the data for October, which is the first month that the Chinese tariffs really took effect.

They found that the Chinese tariffs cost American consumers an extra $2.2 billion, making October the most heavily tariffed month in history. And here's the thing. It really hasn't depressed imports, but China's retaliatory tariffs have depressed U.S. exports to China. So right now it seems like the trade war's hurting the U.S. more than it's hurting China.

CHANG: All right, that's NPR's Scott Horsley. Thanks so much, Scott.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.