U.S. Attorney General William P. Barr has called upon Americans to collaborate in opposing an orchestrated campaign launched by the Chinese Communist Party (CCP) against the United States.
The Attorney General gave a wide-ranging speech on the threat that the CCP poses to America at the Gerald R. Ford Presidential Museum in Grand Rapids, Michigan, on July 16.
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“The CCP rules with an iron fist over one of the great ancient civilizations of the world,” Barr said. “[The CCP] seeks to leverage the immense power, productivity, and ingenuity of the Chinese people to overthrow the rules-based international system and to make the world safe for dictatorship,” he said in a speech widely reported on.
“How the United States responds to this challenge will have historic implications and will determine whether the United States and its liberal democratic allies will continue to shape their own destiny or whether the CCP and its autocratic tributaries will control the future.”
Barr went onto describe how National Security Advisor Robert O’Brien recently spoke about the CCP’s ideology and global ambitions.
“[O’Brien] declared, and I agree, that ‘[t]he days of American passivity and naivety regarding the People’s Republic of China [PRC] are over,’” Barr said. He then went on to quote FBI Director Chris Wray who recently described how “the CCP pursues its ambitions through nefarious and even illegal conduct, including industrial espionage, theft, extortion, cyberattacks, and malign influence activities.”
Barr said that U.S. Secretary of State Mike Pompeo would also talk about the CCP and would “sum up what is at stake for the United States and the free world.”
The Attorney General talked about how, from the 1970s onwards, the PRC quietly became an economic powerhouse and how it has arrived at a point where it is no longer “hiding its strength, nor biding its time” and is now waging an “economic blitzkrieg.”
Barr described this economic blitzkrieg as being “an aggressive, orchestrated, whole-of-government (indeed, whole-of-society) campaign to seize the commanding heights of the global economy and to surpass the United States as the world’s preeminent superpower.”
He said that a core of this effort is the CCP’s Made in China 2025 initiative, which is a plan for PRC domination of high-tech industries. “Backed by hundreds of billions of dollars in subsidies, this initiative poses a real threat to U.S. technological leadership,” Barr said.
“Despite World Trade Organization rules prohibiting quotas for domestic output, Made in China 2025 sets targets for domestic market share (sometimes as high as 70 percent) in core components and basic materials for industries such as robotics and telecommunications. It is clear that the PRC seeks not merely to join the ranks of other advanced industrial economies, but to replace them altogether.”
Barr went on to describe how for U.S. companies in the global marketplace, free and fair competition with the PRC has long been a fantasy.
“To tilt the playing field to its advantage, China’s communist government has perfected a wide array of predatory and often unlawful tactics — currency manipulation, tariffs, quotas, state-led strategic investment and acquisitions, theft and forced transfer of intellectual property, state subsidies, dumping, cyberattacks, and espionage,” he said.
“About 80 percent of all federal economic espionage prosecutions have alleged conduct that would benefit the Chinese state, and about 60 percent of all trade secret theft cases have had a nexus to China.”
Barr went on to describe how the PRC is aiming to control key trade routes and infrastructure in Eurasia, Africa, and the Pacific.
“In the South China Sea, for example, through which about one-third of the world’s maritime trade passes, the PRC has asserted expansive and historically dubious claims to nearly the entire waterway, flouted the rulings of international courts, built artificial islands and placed military outposts on them, and harassed its neighbors’ ships and fishing boats,” he said.
Barr went to describe how Beijing further uses its Belt and Road initiative to spread its power.
“Although billed as ‘foreign aid,’ in fact these investments appear designed to serve the PRC’s strategic interests and domestic economic needs. For example, the PRC has been criticized for loading poor countries up with debt, refusing to renegotiate terms, and then taking control of the infrastructure itself, as it did with the Sri Lankan port of Hambantota in 2017,” he said.
AI challenge, risks of dependence
The Attorney General also outlined how China plans to dominate the world’s digital infrastructure through its Digital Silk Road initiative.
“I have previously spoken at length about the grave risks of allowing the world’s most powerful dictatorship to build the next generation of global telecommunications networks, known as 5G. Perhaps less widely known are the PRC’s efforts to surpass the United States in other cutting-edge fields like artificial intelligence,” he said.
“Through innovations such as machine learning and big data, artificial intelligence allows machines to mimic human functions, such as recognizing faces, interpreting spoken words, driving vehicles, and playing games of skill such as chess or the even more complex Chinese strategy game Go.”
After giving a brief history of the PRC’s efforts and plans to develop AI, the Attorney General issued a warning. “Whichever nation emerges as the global leader in AI will be best positioned to unlock not only its considerable economic potential, but a range of military applications, such as the use of computer vision to gather intelligence,” he said.
Barr then spoke of PRC efforts to monopolize rare earth materials, which play a vital role in industries such as consumer electronics, electric vehicles, medical devices, and military hardware.
“The United States is now dangerously dependent on the PRC for these materials. Overall, China is America’s top supplier, accounting for about 80 percent of our imports. The risks of dependence are real. In 2010, for example, Beijing cut exports of rare earth materials to Japan after an incident involving disputed islands in the East China Sea. The PRC could do the same to us,” he said.
The Attorney General then said that the PRC’s predatory economic policies are succeeding and described how the U.S. assisted in making this possible.
“For a hundred years, America was the world’s largest manufacturer — allowing us to serve as the world’s ‘arsenal of democracy.’ China overtook the United States in manufacturing output in 2010. The PRC is now the world’s ‘arsenal of dictatorship,’” he said.
“How did China accomplish all this? No one should underestimate the ingenuity and industry of the Chinese people. At the same time, no one should doubt that America made China’s meteoric rise possible,” Barr said.
“China has reaped enormous benefits from the free flow of American aid and trade. In 1980, Congress granted the PRC most-favored-nation trading status. In the 1990s, American companies strongly supported the PRC’s accession to the World Trade Organization and the permanent normalization of trade relations. Today, U.S.-China trade totals about $700 billion.”
Barr spoke of a Newsweek story titled How America’s Biggest Companies Made China Great Again detailing how PRC communist leaders lured American business with the promise of market access, and then, having profited from American investment and know-how, turned increasingly hostile.
“The PRC used tariffs and quotas to pressure American companies to give up their technology and form joint ventures with Chinese companies. Regulators then discriminated against American firms, using tactics like holding up permits. Yet few companies, even Fortune 500 giants, have been willing to bring a formal trade complaint for fear of angering Beijing,” Barr said.
“Just as American companies have become dependent on the Chinese market, the United States as a whole now relies on the PRC for many vital goods and services,” he said.
Barr then highlighted how the new COVID-19 pandemic highlighted that dependency.
“For example, China is the world’s largest producer of certain protective equipment, such as face masks and medical gowns. In March, as the pandemic spread around the world, the PRC hoarded the masks for itself, blocking producers — including American companies — from exporting them to countries in need. It then attempted to exploit the shortage for propaganda purposes, shipping limited quantities of often defective equipment and requiring foreign leaders to publicly thank Beijing,” he said.
Barr stressed the PRC’s dominance of the world market for medical goods goes beyond masks and gowns.
“It has become the United States’ largest supplier of medical devices, while at the same time discriminating against American medical companies in China. China’s government has targeted foreign firms for greater regulatory scrutiny, instructed Chinese hospitals to buy products made in China, and pressured American firms to build factories in China, where their intellectual property is more vulnerable to theft. As one expert has observed, American medical device manufacturers are effectively ‘creating their own competitors.’”
Barr also pointed out how the U.S. is now dependent on China for other vital sectors, such as pharmaceuticals — despite America remaining the global leader in drug discovery.
“To achieve dominance in pharmaceuticals, China’s rulers went to the same playbook they used to gut other American industries. In 2008, the PRC designated pharmaceutical production as a high-value-added-industry and boosted Chinese companies with subsidies and export tax rebates,” he said. “Meanwhile, the PRC has systematically preyed on American companies.”
Barr outlined a litany of challenges that U.S. medical firms face if they want to do business in China.
“American firms face well-known obstacles in China’s health market, including drug approval delays, unfair pricing limitations, IP theft, and counterfeiting. Chinese nationals working as employees at pharma companies have been caught stealing trade secrets both in America and in China. And the CCP has long engaged in cyber-espionage and hacking of U.S. academic medical centers and healthcare companies,” he said.
“In fact, PRC-linked hackers have targeted American universities and firms in a bid to steal IP related to coronavirus treatments and vaccines, sometimes disrupting the work of our researchers. Having been caught covering up the coronavirus outbreak, Beijing is desperate for a public relations coup, and may hope that it will be able to claim credit for any medical breakthroughs.”
He summed up what this all meant and then warned U.S. companies.
“As all of these examples should make clear, the ultimate ambition of China’s rulers isn’t to trade with the United States. It is to raid the United States,” he said. “If you are an American business leader, appeasing the PRC may bring short-term rewards. But in the end, the PRC’s goal is to replace you.
“As a U.S. Chamber of Commerce report put it, ‘[t]he belief by foreign companies that large financial investments, the sharing of expertise and significant technology transfers would lead to an ever opening China market is being replaced by boardroom banter that win-win in China means China wins twice.’”
Barr spoke of how the idea that trade and investment would liberalize China has failed to eventuate and that the fundamental character of the PRC regime has never changed.
“As its ruthless crackdown of Hong Kong demonstrates once again, China is no closer to democracy today than it was in 1989 when tanks confronted pro-democracy protesters in Tiananmen Square,” he said.
“It remains an authoritarian, one-party state in which the Communist Party wields absolute power, unchecked by popular elections, the rule of law, or an independent judiciary. The CCP surveils its own people and assigns them social credit scores, employs an army of government censors, tortures dissidents, and persecutes religious and ethnic minorities, including a million Uighurs detained in indoctrination and labor camps.”
‘For the sake of short-term profit’
And instead of the PRC changing for the better through business relationships, Barr said that Beijing is leveraging its economic power to change America.
“As this administration’s China strategy recognizes, the CCP’s campaign to compel ideological conformity does not stop at China’s borders. Rather, the CCP seeks to extend its influence around the world, including on American soil,” he said.
Barr went on to talk about the ramifications of U.S. business kowtowing to PRC leaders and, in that, called out the American entertainment industry.
“All too often, for the sake of short-term profits, American companies have succumbed to that influence — even at the expense of freedom and openness in the United States. Sadly, examples of American business bowing to Beijing are legion,” he said.
“Take Hollywood. Hollywood actors, producers, and directors pride themselves on celebrating freedom and the human spirit. And every year at the Academy Awards, Americans are lectured about how this country falls short of Hollywood’s ideals of social justice,” he said. “But Hollywood now regularly censors its own movies to appease the Chinese Communist Party, the world’s most powerful violator of human rights. This censorship infects not only versions of movies that are released in China, but also many that are shown in American theaters to American audiences.”
Barr gave examples of how this occurred in two big Hollywood films — the Brad Pitt zombie movie World War Z and the Marvel Studios blockbuster Dr. Strange.
He spoke of how certain scripts are likewise shelved because Hollywood writers and producers know they need to avoid issues deemed sensitive to the CCP, which controls China’s lucrative entertainment market.
“Chinese government censors don’t need to say a word, because Hollywood is doing their work for them. This is a massive propaganda coup for the Chinese Communist Party,” he said.
Increasingly, the Attorney General pointed out that Hollywood also relies on Chinese money for financing.
“But in the long run, as with other American industries, the PRC may be less interested in cooperating with Hollywood than co-opting Hollywood — and eventually replacing it with its own homegrown productions,” he said.
“To accomplish this, the CCP has been following its usual modus operandi. By imposing a quota on American films, the CCP pressures Hollywood studios to form joint ventures with Chinese companies, who then gain access to U.S. technology and know-how. As one Chinese film executive recently put it, ‘[e]verything we learned, we learned from Hollywood.’ Notably, in 2019, eight of the 10 top-grossing films in China were produced in China,” Barr said.
Barr went onto describe how America’s big tech companies also allowed themselves to become pawns of Chinese influence.
“In the year 2000, when the United States normalized trade relations with China, President Clinton hailed the new century as one in which ‘liberty will be spread by cell phone and cable modem.’ Instead, over the course of the next decade, American companies such as Cisco helped the Communist Party build the Great Firewall of China — the world’s most sophisticated system for Internet surveillance and censorship,” he said.
Barr then cited some of the big names of the tech world.
“Over the years, corporations such as Google, Microsoft, Yahoo, and Apple have shown themselves all too willing to collaborate with the CCP. For example, Apple recently removed the news app Quartz from its app store in China, after the Chinese government complained about coverage of the Hong Kong democracy protests,” he said and then gave more examples of Apple’s compliance with the CCP.
“Apple also removed apps for virtual private networks, which had allowed users to circumvent the Great Firewall, and eliminated pro-democracy songs from its Chinese music store. Meanwhile, the company announced that it would be transferring some of its iCloud data to servers in China, despite concerns that the move would give the CCP easier access to e-mails, text messages, and other user information stored in the cloud,” he said.
Barr spoke of how the CCP has long used public threats of retaliation and barred market access to exert influence.
“More recently, however, the CCP has also stepped up behind-the-scenes efforts to cultivate and coerce American business executives to further its political objectives — efforts that are all the more pernicious because they are largely hidden from public view,” he said.
“As China’s government loses credibility around the world, the Department of Justice has seen more and more PRC officials and their proxies reaching out to corporate leaders and inveighing them to favor policies and actions favored by the Chinese Communist Party,” he said.
Barr then explained how this works.
“Their objective varies, but their pitch is generally the same — the businessperson has economic interests in China, and there is a suggestion that things will go better (or worse) for them depending on their response to the PRC’s request. Privately pressuring or courting American corporate leaders to promote policies (or politicians) presents a significant threat, because hiding behind American voices allows the Chinese government to elevate its influence and put a ‘friendly face’ on pro-regime policies,” he said.
“The legislator or policymaker who hears from a fellow American is properly more sympathetic to that constituent than to a foreigner. And by masking its participation in our political process, the PRC avoids accountability for its influence efforts and the public outcry that might result, if its lobbying were exposed.”
Barr went on to warn America’s corporate leaders that such acts can’t be brushed off as cultivating mutually beneficial relationships or it’s just how to do business with the PRC, it could actually be breaking U.S. law under the Foreign Agents Registration Act.
‘Infiltrate, censor, or co-opt’
In his speech, Barr pointed out that CCP influence operations likewise exist in the world of academia.
“The Chinese Communist Party also seeks to infiltrate, censor, or co-opt American academic and research institutions,” the Attorney General said. “For example, dozens of American universities host Chinese government-funded Confucius Institutes, which have been accused of pressuring host universities to silence discussion or cancel events on topics considered controversial by Beijing,” he said.
The Attorney General called on universities to stand up for each other and oppose CCP efforts to coerce them.
“In a globalized world, American corporations and universities alike may view themselves as global citizens, rather than American institutions. But they should remember that what allowed them to succeed in the first place was the American free enterprise system, the rule of law, and the security afforded by America’s economic, technological, and military strength,” he pointed out.
“Globalization does not always point in the direction of greater freedom. A world marching to the beat of communist China’s drums will not be a hospitable one for institutions that depend on free markets, free trade, or the free exchange of ideas,” he said.
“There was a time American companies understood that. They saw themselves as American and proudly defended American values.”
The Attorney General gave the example of how this was once the case for Disney, an iconic American company that helped U.S. efforts against fascism during World War II, but who now allows CCP involvement in its operations in China.
“I suspect Walt Disney would be disheartened to see how the company he founded deals with the foreign dictatorships of our day,” he said before providing details on how Disney has kowtowed to the Chinese regime.
Barr then went on to talk about how American companies must understand what is at stake.
“The Chinese Communist Party thinks in terms of decades and centuries, while we tend to focus on the next quarterly earnings report. But if Disney and other American corporations continue to bow to Beijing, they risk undermining both their own future competitiveness and prosperity, as well as the classical liberal order that has allowed them to thrive,” he said before adding that the free enterprise system was once under attack during the Cold War and how American companies were, at that time, urged to do more to preserve it.
“So too today. The American people are more attuned than ever to the threat that the Chinese Communist Party poses not only to our way of life, but to our very lives and livelihoods. And they will increasingly call out corporate appeasement,” he said.
But Barr said that he saw there has been some pushback in recent times by the likes of some American tech companies.
“Despite years of acquiescence to communist authorities in China, American tech companies may finally be finding their courage through collective action. Following the recent imposition of the PRC’s draconian national security law in Hong Kong, many big tech companies, including Facebook, Google, Twitter, Zoom, and LinkedIn, reportedly announced that they would temporarily suspend compliance with governmental requests for user data,” he said. “True to form, communist officials have threatened imprisonment for noncompliant company employees. We will see if these companies hold firm. I hope they do. If they stand together, they will provide a worthy example for other American companies in resisting the Chinese Communist Party’s corrupt and dictatorial rule.”
Barr finished his speech with a call to action.
“The CCP has launched an orchestrated campaign, across all of its many tentacles in Chinese government and society, to exploit the openness of our institutions in order to destroy them. To secure a world of freedom and prosperity for our children and grandchildren, the free world will need its own version of the whole-of-society approach, in which the public and private sectors maintain their essential separation but work together collaboratively to resist domination and to win the contest for the commanding heights of the global economy,” he said.
“America has done that before. If we rekindle our love and devotion for our country and each other, I am confident that we — the American people, American government, and American business together — can do it again. Our freedom depends on it.”