The Cost

and lack of respect for the rule of law. Under the George W. Bush administration, then–Treasury secretary Henry M. Paulson Jr. led the U.S.-China economic dialogue. A former Goldman Sachs CEO, he considered a number of Chinese leaders his friends and sought to assure them during the 2008 financial crisis that the Chinese would recoup the money they invested in bonds backed by the failing U.S. mortgage firms Fannie Mae and Freddie Mac, which were rescued by U.S. taxpayers.

But even Paulson is now sounding more like Trump, saying in a 2018 speech in Singapore:

The United States played the decisive role in facilitating China’s entry into the World Trade Organization. Yet 17 years after China entered the WTO, China still has not opened its economy to foreign competition in so many areas.

It retains joint venture requirements and ownership limits.

And it uses technical standards, subsidies, licensing procedures, and regulation as non-tariff barriers to trade and investment.

Nearly 20 years after entering the WTO, this is simply unacceptable.

It is why the Trump Administration has argued that the WTO system needs to be modernized and changed. And I agree.…

Trade with China has hurt some American workers. And they have expressed their grievances at the ballot box.

So while many attribute this shift to the Trump Administration, I do not.

What we are now seeing will likely endure for some time within the American policy establishment.

China is viewed—by a growing consensus—not just as a strategic challenge to the United States but as a country whose rise has come at America’s expense.¹⁷

The Chinese Communist Party is waging a “generational fight to surpass our country in economic and technological leadership,” according to the FBI’s Christopher Wray, “but not through legitimate innovation, not through fair and lawful competition, and not by giving their citizens the freedom of thought and speech and creativity we treasure here in the United States. Instead, they’ve shown that they’re willing to steal their way up the economic ladder at our expense.”

Wray pointed out that “we see Chinese companies stealing American intellectual property to avoid the hard slog of innovation, and then using it to compete against the very American companies they victimized—in effect, cheating twice over.

“Part of what makes this threat so challenging is that the Chinese are using an expanding set of non-traditional methods—both lawful and unlawful—blending things like foreign investments and corporate acquisitions with things like cyber intrusions and espionage by corporate insiders. Their intelligence services also increasingly hire hacking contractors, who do the government’s bidding, to try to obfuscate the connection between the Chinese government and the theft of our data.”¹⁸

Senator Ted Cruz said on Sunday Morning Futures on Fox News that this is the first time we are seeing theft of intellectual property “being used as an actual strategy to win the global race to number one.”¹⁹

The FBI’s Wray emphasized that “this threat is not about the Chinese people as a whole, and certainly not about Chinese-Americans as a group.”²⁰ But the Chinese government has encouraged “the rob, replicate, and replace approach,” said John C. Demers, assistant U.S. attorney general for national security. “You rob the intellectual property, then replicate the product, and then you replace the company on the Chinese market and if all goes well on the global market.”²¹

Senator Lindsey Graham (R-S.C.), chairman of the Senate Judiciary Committee and a member of the Senate Foreign Relations Committee, said Trump has changed American policy toward China. “He made a decision that our engagement policy under Nixon has not worked,” Graham told Maria. “They are a rogue nation and we need to treat them that way.”²²

The United States has effectively banned equipment from telecom giant Huawei in U.S. telecom networks and pushed for the rest of the world to do the same. Secretary of State Mike Pompeo has traveled the world telling allies: “If you are using Huawei in your telecom infrastructure, the U.S. will be forced to limit the information it shares with you.”²³ Since 2012, Huawei has employed Andy Purdy as the chief security officer for its U.S. business. Before getting the job at Huawei, Purdy was on the White House staff during the George W. Bush administration, where he helped draft the U.S. national cybersecurity strategy. Then he went to the Department of Homeland Security where he helped to launch the National Cyber Security Division and then led the U.S. Computer Emergency Readiness Team. He was essentially the senior cybersecurity official in the U.S. government.

Now working for Huawei, Purdy has joined Maria on Fox Business many times and denied any back doors to China in Huawei infrastructure, saying he would not share information even if the communist government asked: “I do not support it and it’s not our understanding that we have to turn over all our technology to the Chinese government. That’s not what our leadership says.”²⁴ But what Chinese law says is that the company is required to turn over data demanded by the government. Huawei chairman Ren Zhengfei, a member of the Communist Party, claims that “we would rather shut Huawei down than do anything that would damage the interests of our customers to seek our own gains.”²⁵

In his 2020 speech, Wray noted that China’s laws not only allow the government to compel any Chinese company to provide any and all information it requires, but also that this could include American citizens’ data, and that Chinese companies are required to have Communist Party “cells” inside the company to keep them in line.²⁶

Former Google CEO Eric Schmidt, who chairs a Pentagon innovation board, told the BBC that Huawei appears to be used by the Chinese government to spy. But he still argues that the answer is to compete economically, not to cut off engagement.

“There’s no question that Huawei has engaged in some practices that are not acceptable in national security,” Mr. Schmidt said. “There’s no question that information from Huawei routers has ultimately ended up in hands that would appear to be the state. However that happened, we’re sure it happened.” Nonetheless, he didn’t want to cut