Category Archives: markets

Defense of the Republic of China

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Paul Wolfowitz had a thought on that last Tuesday. His opening paragraph laid out his thesis.

Beijing has been making a show of hostility toward Taiwan. Last week China released footage of “real combat” it conducted last month in Taiwanese airspace. A Chinese invasion would present the greatest threat to global peace in a generation. The US would confront an agonizing dilemma: risk an armed clash between two nuclear superpowers or abandon a free people to communist tyranny. But there’s an alternative—deter the threat by committing to oppose it, by force if necessary.

I’d be a bit more blunt.

It would be good to remind the PRC of who has vastly more nuclear warheads than the other, who has the better cyberwar capability, and how little the US depends on river dams—or a single dam—for its food supply.

It also would be good to stage our own demonstrations, real rather than virtual, throughout the East and South China Seas and in the Taiwan strait and to increase and accelerate arms sales to the Republic of China.

Joe Biden, however, is the epitome of an Asian nation being of little strategic value, of a commitment to use military force in [RoC] would be ill-advised and impracticable, and whose prevailing mood… [is] not to interfere—after all, the PRC, Biden insists, is not a serious competitor; the nation isn’t a “patch on our jeans.”

The EU and the US’ Tariffs

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Valdis Dombrovskis, European Commissioner for Trade, is demanding that we remove our WTO-sanctioned punitive tariffs on EU products, or he’ll start a trade/tariff war with us.

He isn’t even trying to be serious about trade. Leave aside the fact that the current tariffs have been explicitly approved by the WTO, and Dombrovskis’ own duplicity:

Of course, if the US is not withdrawing their tariffs we have no choice but to then introduce our tariffs[.]

Because it’s entirely appropriate for the EU to retaliate against WTO-approved punitive tariffs.

Consider, instead, the larger picture.

Trump has offered the EU, on more than one occasion, a completely tariff-free trade regime. The EU has refused even to discuss the matter.

Dombrovskis has this bit of cynicism, too:

But in any case, we will be engaging…and trying to bring the US administration back within the framework of multilateralism[.]

He—and the EU government for which he works—refuse the multilateralism of that no-tariff trade regime we’ve offered to the EU and each of its multilateral constituent member nations for which the EU governance speaks.

Alternatives

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In an op-ed in Friday’s Wall Street Journal centered on the foolishness of “sustainable” investing, Burton Malkiel had this remark:

The most effective way to reduce an economy’s carbon intensity is to change the economic incentive to pollute.

Not at all. The most effective way to reduce an economy’s carbon intensity—even assuming that’s a useful thing to do—is to provide viable alternatives to carbon intensity. So far, all the Left and their Progressive-Democratic Party is willing to offer is punishment for carbon intensity.

All that does is punish the successful because the less successful don’t or can’t keep up or do better.

Insufficient

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Recall that Oracle and ByteDance have a proposal on the table for Oracle to take a minority partnership position in ByteDance’s TikTok.  In response to objections to that, some

Trump administration officials are looking to give American investors a majority share of the company that will take over the Chinese-owned video-sharing app TikTok[.]

Senators Marco Rubio (R, FL), Rick Scott (R, FL), Thom Tillis (R, NC), Roger Wicker (R, MI), Dan Sullivan (R, AK), and John Cornyn (R, TX), object to that, too.

Any deal between an American company and ByteDance must ensure that TikTok’s US operations, data, and algorithms are entirely outside the control of ByteDance or any Chinese-state directed actors, including any entity that can be compelled by Chinese law to turn over or access US consumer data.

The Senators are absolutely correct. Any fraction of ownership by a People’s Republic of China company that’s greater than zero is too much; giving, as it would, the PRC’s intelligence community access to all the data TikTok scoops up from the individuals and businesses that use it.

A TikTok Partnership

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Oracle Corp has become the frontrunner in the race to do a deal with the People’s Republic of China company ByteDance, which owns TikTok, for an acquisition of that app. That status seems solidified by ByteDance having submitted a proposal to the US government that lays out the terms of a deal in which Oracle would become the junior partner in a TikTok-Oracle(-ByteDance?)…alliance.

Recall that President Donald Trump has required that ByteDance divest itself of TikTok as a condition of TikTok’s being allowed to continue operating in the United States. Trump’s objection to TikTok is centered on the app’s scooping up of a vast range of personal and personally identifying data and the subsequent transmittal of those data to back to ByteDance inside the PRC.

Recall further that three years ago the PRC passed a law requiring every single company based or operating inside the PRC to cooperate with every single request for information that the PRC’s intelligence community might have.  That would include the personal and personally identifying data that TikTok vacuums up on each of its users, including the 100 million American users.

Critical aspects of this proposed “partnership” include these two:

  • the ByteDance proposal will involve expanding TikTok’s US offices to become the global headquarters
  • hav[e] Oracle certify the security of the app’s data….

The first is an insult to our intelligence, intended as it is solely to distract from the security problem.

The second is insufficient to the point of irrelevancy. Under the PRC law, to repeat, every PRC domiciled or headquartered company must comply with every information request from the PRC’s intelligence community. It matters not a whit how “secure” TikTok’s data might be; so long as a PRC company owns even a smidge of TikTok, that company will be bound by law to submit any and all TikTok data—those personal and personally identifiable data, for instance—to the PRC’s intelligence agency when asked, and TikTok will be bound to submit those data to that company for passing along.

And that should be a deal breaker.