Piling On

If there’s one thing the political types in Washington can agree on today, it’s this: let’s go after China. Just about everything is seen as part of a nefarious Chinese master plan to take over the world.

In February, the Biden Administration announced a plan to subsidize the manufacturing of ship-to-shore container cranes in the United States after concluding that Chinese-made cranes represent a security risk. “These cranes may, depending on their individual configurations, be controlled, serviced, and programmed from remote locations,” the U.S. Maritime Administration insists, without much proof. Over time, the Chinese-made cranes are to be replaced by cranes manufactured in the United States by Mitsui, a Japanese company, because the Japanese are now our trusted friends…

…except when it comes to making the steel that goes into the cranes. In March, President Biden made clear his opposition to Nippon Steel’s plans to purchase United States Steel Corporation because the United Steelworkers Union is against it. Since then, senators of both parties have attacked the transaction on the basis of a report by an outfit called Horizon Advisory, which claims that “Nippon’s exposure to and operations in the Chinese market…introduces a potential national security risk.” It’s not clear who paid Horizon to write this report, but if a Japanese company’s involvement in China is reason to block its investment in the United States, do we really want Mitsui, which has extensive ties to China, to be making our container cranes?

This month, we’ve heard from both Republican and Democratic members of Congress who want to prohibit index funds from investing in China and to tax investments in China in a punitive way. One of them, Rep. Victoria Spartz, thinks that ‚ÄúCongress has a duty to the American people to protect their hard-earned money from foreign adversaries like China” and therefore needs to tell Americans which stocks they can and cannot own. Instead of index funds that hold Chinese stocks, apparently, we should own stocks like U.S. Steel, which, according to the consulting firm Macrotrends, trades at a lower price now, adjusted for splits and dividends, than it did in 2006.

Let’s be clear: China poses some serious national security challenges to the United States. They need to be addressed in a careful and sober way. Treating everything as a Chinese threat may generate headlines, but it does nothing to make the United States more secure. It’s just piling on.

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