Would you pay the price of a brand-new car to have dinner with someone who wants to put you out of business? The commonsense answer would be no. Yet that’s exactly what Boeing CEO Stanley Deal did.
On Nov. 16, Deal forked over $40,000 to sit with Xi Jinping at the latter’s corporate summit in San Francisco. He likely did so because he is eager to resume deliveries of his company’s 737 MAX to Chinese airlines after a years-long delay.
It’s a perfect illustration of how insane the U.S.-China economic relationship has become, because Xi’s stated goal is to displace Boeing in a matter of years.
"China," wrote Beijing bureaucrats in their 2015 agenda-setting document, "should ‘enter the front ranks of second-tier manufacturing powers’ by 2035." They continued: "China should ‘enter the first tier of global manufacturing powers’ by 2045, at which point China will have ‘innovation-driving capabilities,’ ‘clear competitive advantages,’ and ‘world-leading technology systems and industrial systems.’"
This might sound inoffensive, but what it entails is not. Xi has tasked China’s public and nominally private sectors to achieve "self-sufficiency" in advanced manufacturing within the near term.
This requires significantly lowering the global market share of American companies, not just through competition, but through state subsidies, market manipulation, and outright theft of trade secrets and intellectual property.
Boeing is one of Xi’s top targets. Commercial planes are currently America’s greatest export to China and the world generally. Beijing wants that reversed.
The fact that Boeing and partner firms, including Honeywell, are still willing to court Chinese markets, open factories on the Chinese mainland, and embark on joint ventures with Chinese counterpart COMAC is not a mark in their favor. It is a sign that they are playing Beijing’s game all too well.
Case in point? COMAC built its primary competitor to the 737 MAX, the C919 passenger jet, almost entirely from stolen Western business data.
The standard counterargument is that the C919 is still incapable of challenging Boeing’s dominance. However, China’s abilities are rapidly improving. Beijing’s "mimic-and-replace" strategy is, in notable instances, working.
Just look at solar panels, telecom and electric vehicles. For many years, American firms held the edge in each of these industries. Then suddenly, they didn’t. Even the C919 is no idle threat. COMAC recently unveiled two new variants of the jet for short hops and longer hauls.
Moreover, non-Chinese airlines in the Indo-Pacific are already lining up to purchase COMAC planes. The old line that "China can’t compete" holds less water every day.
Are our corporate elites aware of this? Right now, there is plenty of attention being paid to China’s increasingly draconian legal system, and there is plenty of ink being spilled on investors "de-risking" from Shanghai and Hong Kong.
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But the greatest danger of doing business in China is not that American companies will fall out of favor with the world’s largest communist regime – it is that their cooperation with that regime will render them obsolete, once and for all. The clock is ticking for Wall Street, Silicon Valley and industrial giants to figure this out.
Meanwhile, policymakers have a duty to protect our national interest, and therefore, they have a duty to pass commonsense laws that protect and strengthen America’s edge in advanced manufacturing.
This means authorizing more targeted investment in domestic production. It means enacting tighter export controls. And it means placing greater restrictions on inbound and outbound investment.
These measures may be unpopular on the corporate left and the libertarian right. But they are what’s best for our country – and for the long-term interest of companies’ shareholders, who stand to lose everything if Beijing emerges victorious.
Those who disagree would do well to remember the words of President John F. Kennedy’s inaugural address: "in the past, those who foolishly sought power" – or shall we say profits? – "by riding the back of the tiger ended up inside."
