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Politics Trump Contradicts Advisers on China Technology Fears

22:25  18 february  2020
22:25  18 february  2020 Source:   nytimes.com

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WASHINGTON — President Trump publicly objected to efforts within his own administration to restrict the sales of American technology to China over national security concerns, insisting on Tuesday that such fears were an “excuse” and that the United States was open for business.

Donald Trump wearing a suit and tie: President Trump, in a series of tweets, suggested he did not want the U.S. to curb the flow of technology to China, putting him at odds with many of his top advisers.© Anna Moneymaker/The New York Times President Trump, in a series of tweets, suggested he did not want the U.S. to curb the flow of technology to China, putting him at odds with many of his top advisers.

Mr. Trump’s comments appeared to represent a striking reversal of his administration’s aspirations to curb China’s ascent as a global leader in technology and came as cabinet officials were expected to discuss tougher restrictions on China later this month.

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That meeting, set for Feb. 28, was expected to include a discussion about whether to halt sales to China of an aircraft engine produced in part by General Electric by blocking its license to export the technology. Officials were also expected to consider new rules that would further curtail the ability of Huawei, the Chinese telecom giant, to have access to American technology, including semiconductors.

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But on Tuesday, Mr. Trump seemed to pre-emptively scuttle such moves. Two people familiar with the matter said that the late February meeting was on hold and that the U.S. would not block G.E.’s ability to sell jet engine parts to China.

“The United States cannot, & will not, become such a difficult place to deal with in terms of foreign countries buying our product, including for the always used National Security excuse, that our companies will be forced to leave in order to remain competitive,” Mr. Trump wrote. “We want to sell product and goods to China and other countries.”

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The about-face is the latest blow to the China hawks in the Trump administration and another win for more moderate advisers like Treasury Secretary Steven Mnuchin, who has been pushing for greater accommodation of Beijing amid pressure from corporate America.

Mr. Trump, in his comments on Twitter, went on to say that if the U.S. did not sell its products for national security reasons, then other countries would step in and do so, hurting American companies. Mr. Trump explicitly referenced the jet engine sales.

“As an example, I want China to buy our jet engines, the best in the World,” he said. “I have seen some of the regulations being circulated, including those being contemplated by Congress, and they are ridiculous.”

The president said that he has made this sentiment clear to everyone in his administration.

Speaking on the tarmac at Joint Base Andrews in Maryland, Mr. Trump insisted that he cared deeply about America’s national security but suggested that the term was being wielded too broadly and at the expense of the U.S. economy.

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“I want our companies to be allowed to do business,” Mr. Trump said, referring specifically to chip-makers, who have complained about lost sales to Huawei, a large buyer of American semiconductors. “Things are put on my desk that have nothing to do with national security.”

Mr. Trump added that he has been “very tough on Huawei” but said that did not need to extend to other companies.

The administration’s efforts to restrict the flow of American technology to China has triggered objections from companies, who say it undermines their ability to compete on a global scale. Foreign firms have already taken steps to limit the American components in their products over concerns that access to parts they need could be cut off. And some American companies say they may begin to do more research and development outside the United States to avoid running afoul of the administration’s stricter China rules.

General Electric, in response to media reports on Saturday about the administration’s review of its export license, said in a statement that it would comply with any requirements imposed by the United States but downplayed concerns about the risks of sales to China.

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“We aggressively protect and defend our intellectual property and work closely with the U.S. government to fulfill our responsibilities and shared security and economic interests,” General Electric said in a statement. “G.E. has provided products and services in the global marketplace for decades.”

The potential U.S. restrictions have gotten China’s attention.

Geng Shuang, spokesman for China’s foreign ministry, criticized the U.S. proposal to halt the jet engine deliveries during a news conference on Tuesday.

“It would expose certain U.S. officials’ ignorance in science and technology, disregard of the market principle, and anxiety with China’s development,” he said during a briefing. “It will be another example of the U.S. using political means to undermine bilateral commercial cooperation and wantonly oppress China.”

Mr. Trump’s description of national security as an “excuse” for interfering in international commerce is surprising given the president’s decision to routinely link economic and national security. Mr. Trump has cited the need to protect national security in his decision to impose tariffs on foreign metals and to consider placing them on foreign autos. The U.S. has also cited national security in expanding its ability to block international mergers and acquisitions.

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The shift in position is also notable given the administration’s ongoing efforts to crack down on Huawei, the Chinese telecom giant that is on a government blacklist. Administration officials were expected to further restrict American sales to Huawei by closing a loophole that has allowed technology companies like Intel and Micron to continue shipping chips, software and other products to Huawei. While the Pentagon initially opposed the tighter rules, fearing it could hurt defense suppliers, it has now reversed its position under pressure from other administration officials.

That reversal came amid tougher words toward China from top Trump administration officials, who in recent days have expressed growing concern about China’s technology dominance.

Speaking at the Munich Security Conference on Saturday, Defense Secretary Mark T. Esper assailed China for stealing technology and then developing its own systems to dominate critical sectors.

“Huawei and 5G are today’s poster child for this nefarious activity,” Mr. Esper said.

Secretary of State Mike Pompeo took the criticism of China a step further at the conference, referring to Chinese state-backed technology companies as “Trojan horses for Chinese intelligence.”

It appeared that Mr. Trump shared that sentiment. Richard Grenell, the American ambassador to Germany, said on Twitter on Sunday that the president had just called him from Air Force One and asked him to make clear that “any nation who chooses to use an untrustworthy 5G vendor will jeopardize our ability to share Intelligence and information at the highest level.”

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But Mr. Mnuchin — a close confidante of Mr. Trump who has repeatedly warned against pursuing draconian measures that would stifle business and inhibit the United States economy during an election year — appeared to have influenced the president’s decision.

The Treasury Department had no comment.

On Tuesday, business groups cheered the shift in tone, which came suddenly and took some by surprise.

“We applaud President Trump’s tweets supporting U.S. companies being able to sell products to China and opposing proposed regulations that would unduly curtail that ability,” John Neuffer, president and chief executive of the Semiconductor Industry Association, said in a statement. “As we have discussed with the administration, sales of nonsensitive, commercial products to China drive semiconductor research and innovation, which is critical to America’s economic strength and national security.”

Jacob Parker, senior vice president of the US-China Business Council, said that the administration was notorious for giving mixed messages on such policies and that he was hopeful that the White House would put out a formal notification that the tighter rules affecting companies that sell components to Huawei are off the table.

“We hope that the message that this is undermining the ability of companies to invest in long-term research and development is beginning to resonate with those in the administration,” Mr. Parker said.

Julian Barnes and David McCabe contributed reporting

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