The Great Industrial Wall of China

The American Prospect (Bartholomew) - Beijing's mercantilism challenges America's market ideology and industrial future.

On a flight to Beijing, my seatmate turned out to be a corporate counsel for a major U.S. manufacturer. He was leading the negotiations for the company's entrance into a significant sector of the Chinese economy. Surprisingly, he acknowledged that his company's intellectual property would eventually be lost as a result of the deal, through technology transfer, reverse engineering, or flat-out theft. He knew that the company's crown jewels were going to be taken no matter what protections he negotiated. Still, he worked diligently to close the deal. He had the assistance of the U.S. government in pushing the transaction and the support of the Chinese government in backing it. The deal would be a short-term gain but a long-term risk to his company and the U.S. economy, and it would utterly exclude the people not at the bargaining table: the American workers whose jobs would be lost to China.

A wide variety of financial incentives offered by Chinese government authorities to U.S. companies prove irresistible to business people like my seatmate, despite the many dangers of investing in China. No wonder my seatmate admitted that he lies awake at night thinking about his children's economic future...

Carolyn Bartholomew chairs the U.S. / China Economic and Security Review Commission.