HOW HE SEES IT China attracts bipartisan criticism

By DANIEL SNEIDER
KNIGHT RIDDER NEWSPAPERS
Partisan warfare over every conceivable issue is the norm these days in Washington. There is one interesting exception to that trend: China.
Increasingly, Democrats and Republicans are speaking with one voice in pushing for tough action on the massive trade deficit with China. In their eyes, China is more a threat -- particularly as an economic competitor -- than an emerging partner.
The clearest evidence of this bipartisan mood was the overwhelming Senate vote last month in favor of a bill proposed by New York Democratic Sen. Charles Schumer that would impose a 27.5 percent tariff on all Chinese goods unless Beijing adjusts its currency within six months. The belief is that China keeps its currency value artificially low to make its exports cheaper.
The Bush administration is scrambling to contain the anti-China wave. It has stepped up its own rhetoric on China's trade practices. When the Treasury Department issues its twice-yearly report on currencies this week, it is likely to come close to naming China a "currency manipulator."
Damage control
Unfortunately, the administration seems more interested in political damage control than in really tackling the China challenge.
Focusing on China's currency, however legitimate that issue may be, is not a serious response. A revaluation would likely only spur currency speculation and financial instability and is unlikely to significantly affect the trade imbalance.
Taking China to task on intellectual property rights makes much more sense. That was a clear message that emerged from testimony this past week at hearings conducted in Silicon Valley by the U.S.-China Economic and Security Review Commission. The commission was created by Congress in 2000 to examine the national security implications of trade and investment with China and to make recommendations to Congress.
The two-day hearings at Stanford on China's high-technology development brought together a wide range of serious voices, from business, academia and elsewhere. Both the Democratic and Republican appointees to the commission clearly have a dark view of China. But it offers a useful counterbalance to the overly rosy case for engagement with China by the foreign-policy establishment.
Opportunity
On balance, Silicon Valley sees China as more of an opportunity than a threat. There is certainly unease with China's rise as a technological power. Some worry that in their eagerness to enter the Chinese market, firms hand over technological treasures to potential global competitors. But most feel it is already too late to cut off the flow to China of technologies such as semiconductors. The Bush administration relaxed controls on much of this technology going to China in 2002.
"In this global market, the U.S. is a leader, but we are not dominant in the market and we are not able to control the market," former Defense Secretary William Perry, also a longtime Stanford engineering professor and venture capitalist. Rather, he and others emphasized, the United States needs to maintain its leadership as an innovator.
Key to that is protecting intellectual property such as computer software codes, equipment designs and basic research. The growing trend to outsource R & amp;D facilities to China makes this even more difficult.
Chinese legal provisions to protect intellectual property, part of its admission to membership in the World Trade Organization, are almost entirely on paper, "meant mainly to mollify the concerns of foreign investors," Alan Wong, senior counsel of chip maker Nvidia, told the commission. Foreign companies put their printers in locked rooms and don't put USB ports or disc drives on their computers so Chinese employees can't copy key documents, he said.
Strategy of theft
"China is pursuing a national development strategy based on the uncompensated, unapproved stealing of other nations' best ideas and technologies," Pat Choate, author of a new book on this issue, told the commission.
A report due this week from the Trade Representative's Office will probably place China, along with about 50 other countries, as a "priority foreign country" when it comes to investigating violations of intellectual property rights. That is a good first step but they need to move rapidly to take this issue to the WTO.
Intellectual property is the real test of whether China will play by global rules. And it is the real test of whether the Congress and the administration want to solve problems or just play politics.
X Daniel Sneider is foreign affairs columnist for the San Jose Mercury News. Distributed by Knight Ridder/Tribune .