US measures against China threaten to destabilize global competition

Editor’s Note: Daryl Guppy, a special commentator for CGTN, is an expert in international financial technical analysis. He has provided weekly analysis of the Shanghai Index for mainland Chinese media for over a decade. Guppy regularly appears on CNBC Asia and is known as “The Chart Man.” He is a former national board member of the Australia China Business Council. The article reflects the views of the author and does not necessarily reflect the views of CGTN.

More Chinese companies have come under attack in the mafia capitalist approach the United States uses to suppress and destroy Chinese business competitors. The latest measure is the Biosecure Act, which initially targeted five Chinese companies. The U.S. House of Representatives overwhelmingly passed the bipartisan bill Monday — one of a series of bills targeting China that must then be passed by the Senate before President Joe Biden signs them into law.

The cover for this attack on competition is the all-encompassing “national security.” This is a loophole in the World Trade Organization (WTO) that has been shamelessly exploited by the Joe Biden and Donald Trump administrations. It is part of a pattern of U.S. lawmakers demanding that Chinese parent company Bytedance pull out of TikTok or risk a U.S. ban on the popular social media site.

In reality, it is a fig leaf that disguises the use of government powers to eliminate competition in favor of American companies that are often unable to provide products or services of comparable quality. It is the American consumer who pays a high price for tariffs and sanctions that block their access to better and cheaper products.

Several other bills targeting China are scheduled for a vote in the coming weeks, including legislation targeting China’s electric vehicle supply chains and other industries. These measures are designed to weaken the Chinese economy by attacking Chinese companies.

This is the full bloom of mafia capitalism. The mafia used stand-over tactics to extort money from successful companies, or to burn them down and destroy business competitors. The methods used by American policymakers are different, but they have the same impact.

The Mafia’s grip was broken in 1970 by the Racketeer Influenced and Corrupt Organizations (RICO) Act, which gave the FBI unprecedented powers.

In the current context, it would require the WTO to exercise similar powers to address these unilateral protectionist policies that bend and break the rules of global trade. Unfortunately, the United States has also launched a campaign to weaken the WTO. The campaign includes continued refusal to appoint new appellate judges, which has slowed down the resolution of trade disputes, including the abuse of sanctions.

A prominent Democrat, Jim McGovern, asked his colleagues to reject the Biosecure Act, arguing that it singles out companies to punish without clear standards to follow. He is a lone voice of reason in the wilderness. Unlike the RICO Act, there is no legal basis for a challenge to the ethics or rationality of the Biosecure Act.

The legislation has significant implications for the global pharmaceutical industry. A large part of the global drug supply chain involves active ingredients produced by Chinese biotechnology companies.

The targeted companies deny they pose a threat to national security and say they are focused on innovation in health care. One of the companies, Complete Genomics, said the bill would bolster the already dominant market share of U.S. rival Illumina. That observation goes to the heart of a series of policies designed to undermine the competitive success of Chinese companies.

Mafia capitalism is armed not only with discriminatory policies, but also with outright lies spread by the national security apparatus. The US launched a propaganda campaign against Chinese COVID-19 vaccines, leading to thousands of needless deaths in the Global South. “We weren’t looking at this from a public health perspective,” said a senior military officer involved in the program. “We were looking at how we could drag China through the mud.”

Today, the military continues to use a vast ecosystem of social media influencers, front groups and covertly placed digital ads to influence overseas audiences, current and former military officials say. They’re aided by the America Competes Act of 2022, which allocates more than $500 million annually to media outlets to produce critical journalism about China.

The drivers of this mafia capitalism are both complex and contradictory. On the one hand, the reaction reflects a fundamentally American racist belief that China cannot innovate. On the other hand, it reflects the US fear that China can innovate in artificial intelligence, quantum computing, etc., which drives the CHIPS and Science Act and the recent blacklistings of companies.

If we remove the aspects of racism and hegemonic desires, the concerted US policy attacks on China are driven by the inability to compete, leading to a protectionist policy of tariffs and sanctions. Mafia capitalism is the favorite tool of a plutocracy and the Biosecure Act is its latest iteration. The unilateral behavior is causing enormous damage to Sino-US relations and we can expect more as the US shuts itself off from the world and entrenches itself behind protectionist barriers.

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