President Trump is making a post-election push of his MAGA agenda.
An executive order of Nov. 12 cuts off American investments in Chinese "military-controlled" companies, banning them from American stock and investment markets, and from being held in pension fund portfolios, effective in January.
Americans have subsequently been told to divest themselves within a year of their holdings in those stocks and securities as well.
In the wake of this executive order and to little surprise, prices quickly plunged in China and Hong Kong’s stock market.
The ban is a follow-up to this summer’s Pentagon report that listed 31 major Chinese companies doing business in the United States while assisting the Chinese military — which controls those corporations. Congress ordered the list — which is heavy with companies involved in electronics, space and aviation, communications, construction and shipbuilding — to be compiled.
The Defense Department additionally determined that each company "supports the modernization goals of the People’s Liberation Army (PLA) by ensuring its access to advanced technologies and expertise acquired and developed by even those PRC companies, universities, and research programs that appear to be civilian entities."
Trump’s executive order is a blow to two major initiatives of China’s Communist Party:
1. Its "Made in China 2025" strategic plan to expand the manufacturing sector of the PRC (People's Republic of China), and
2. Its Belt and Road Initiative (BRI) plan to control global trade and transportation infrastructure
The Belt and Road Initiative, with a presence in over 100 countries, involves $1.3-trillion dollars spent by China to build or buy control of the transportation and logistics facilities that are critical to global trade.
That dollar figure comes from Australian conglomerate BHP, which says the BRI is seven times larger than the Marshall Plan funded by America to rebuild Europe after World War 2.
As Forbes puts it, China has been on a "seaport shopping spree" buying control of major port facilities worldwide. Furthermore, another Department of Defense report says the BRI is “leveraging civilian construction for military purposes; and . . . logistics . . . for military purposes.”
A new assessment by the Center for Strategic and International Studies notes that China’s state funding is building over a third of the world’s ocean-going merchant ships, producing 96 percent of the world’s shipping containers, and controlling the largest port and logistics company in the world, all to serve as "the maritime supply arm of the People’s Liberation Army."
The result is that China builds about 1,200 merchant ships a year, while the United States only builds eight.
With regards to combat ships, an October report from the Congressional Research Service warns Congress that China’s fast-growing navy is now “a major challenge to the U.S. Navy . . . in the Western Pacific — the first such challenge the U.S. Navy has faced since the end of the Cold War.”
Since 90% of global trade travels by ship, China is developing a chokehold that it could apply to threaten the economies of every nation, including the United States, in order to enforce its Communist will.
Sadly, there are some who want to invite China to expand its grip on America by repealing the Jones Act a, law prevents any vessel from conducting internal trade within American waters unless it's American-built, American-owned and American-crewed.
This applies to cargoes carried on our waterways, along the intercoastal canals, and between American ports.
It would require a major U.S. commitment to reverse the trend of Chinese dominance of global trade. But keeping the Jones Act prevents China from accelerating the trend by taking control over our internal waters. Homeland security would be at risk if any foreign power infiltrated into the American economy in that way.
Keeping the Jones Act by itself will not remedy the problem of China’s militant expansionism. Cutting off U.S. funds from China’s commercial/military complex may help.
However, to develop real solutions, a first step is that the American people must be better-informed about what China is doing.
A Frontiers of Freedom white paper expands on the preceding article, and is available here for free.
Ernest Istook worked on a vast breadth of issues as a U.S. Congressman. He now practices law, is a political science professor, and is a Distinguished Fellow at Frontiers of Freedom. Istook also is a former Distinguished Fellow at The Heritage Foundation, a Fellow at Harvard's Institute of Politics, and a talk radio host. He is founder and president of Americans for Less Regulation. Find him on Twitter (@Istook), Facebook, or at Istook.com. Read Ernest Istook's Reports — More Here.
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