Today, the U.S-China trade war continues unabated. This increases the risk of slowing the global economy, IMF Chief Christine Lagarde warned last week. Leaders at a G-20 meeting in Japan expressed similar concerns that an open trade war could have serious consequences for markets around the world. Another meeting is set for late June between President Donald Trump and President Xi Jinping; this could ultimately determine the shared economic future of these two global powerhouses.
Here are five facts on issues that are driving the current discord between the U.S. and China:
1. According to CNBC, one in five U.S. companies claims that Chinese companies have stolen their intellectual property within the past year. Moreover, close to a third of the firms polled said that Chinese companies have stolen their intellectual property over the past decade. The remaining 70 percent of companies polled did not know if their intellectual property had been stolen. A representative from the IP Commission told CNBC that this theft costs the U.S. economy up to $600 billion every year.
2. The South China Morning Post reports that profits of state firms are hitting record highs as the number of entities under government control have decreased. This is likely because state-owned enterprises are heavily subsidized and enjoy implicit government guarantees for debts and inexpensive loans, according to Reuters. The Chinese government’s “Made in China 2025” plan specifically outlines $300 billion in financing and other incentives for 10 critical industries.
3. A major point of contention in U.S-China trade talks is the practice of “technology transfer,” in which the Chinese government forces U.S. companies to turn over their tech secrets to Chinese partners as a condition of gaining access to the country’s enormous market. In May, the European Chamber of Commerce released a report highlighting that one in five companies felt forced to reveal their tech secrets, a 10 percent increase since 2017. The report also showed that certain industries felt more acute pressure to do so, including 30 percent of petroleum companies polled, 28 percent of medical device companies polled, and 27 percent of pharmaceutical companies polled.
4. Right now there is a heated race to pioneer 5G, or fifth-generation mobile networks, and China has the leading edge. Bloomberg Government reports that 5G could ultimately be up to 100 times faster than 4G, dramatically changing how the internet is used. If China has the lead in developing this technology, the U.S. fears the equipment and software it develops could be maliciously used to spy on customers in foreign countries.
5. According to the Economic Policy Institute, 3.4 million U.S. jobs were lost between 2001 and 2017 because of the U.S. trade deficit with China. This includes 1.3 million jobs lost between 2008, the start of the Great Recession, and 2017. The report further shows that every single congressional district has lost jobs, with California, Texas, and New York being the hardest-hit states.
