How to Combat an Arrogant China?
Maximize economic growth at home.


Larry Kudlow

Is there a new Cold War developing between China and the United States? That’s a question hovering over President Hu Jintao and his entourage as they come to Washington to discuss military, trade, and financial flash points with the Obama administration.

President Hu told the Wall Street Journal that “we should abandon the zero-sum Cold War mentality.” But is he to be believed?

Everyone agrees that this is a new, muscular, and more aggressive China. The more the Chinese strengthen economically, the more rambunctious they become with their foreign policy. Americans are increasingly irritated by this arrogance.

Just last week — and just as the Pentagon plans to cut back on the modernized F-22 stealth fighter — China insulted Defense Secretary Robert Gates by test-flying its own J-20 stealth bomber during his visit. Admiral Mike Mullen, head of the Joint Chiefs of Staff, wondered out loud why China is boosting its high-tech weaponry. He said, “Many of these capabilities seem to be focused very specifically on the United States.”

Surely the J-20 flight was a snub to Washington. Surely China’s whole military buildup is aimed directly at us. And surely China is of no particular help when it comes to the nuclear operations of North Korea and Iran.

Then, of course, are the numerous trade violations being committed by China. Commerce Secretary Gary Locke wants a level playing field on trade. As a strong free-trader myself, I recognize the many benefits free and open trade offers both China and the United States. But like many others, my free-trade patience with China is wearing thin.

They’re stealing our technology, violating all sorts of patent-protection laws, hacking into Google, and infringing on intellectual-property rights. In fact, 80 percent of Chinese software is reportedly pirated from American companies.

A new Chinese requirement for joint ventures with the U.S. — where China gets 51 percent, and our companies only 49 percent — looks like another attempt to snake our technology. Chinese local-content prescriptions prevent our firms from doing business with China’s state and local governments. The China curb on rare-earth materials, important both for U.S. technology and defense security, is yet another free-trade violation.