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Interview

China is trying to steal our future: Navarro

Hard-line White House adviser says trade agreement in 90 days will be difficult

White House trade adviser Peter Navarro talks to Nikkei at the White House on Dec. 20. (Photo by Mikio Sugeno)

WASHINGTON -- U.S. President Donald Trump's trade adviser told Nikkei that it would be "difficult" for the U.S. and China to arrive at an agreement after the 90-day period of talks unless Beijing was prepared for a full overhaul of its trade and industrial practices.

In an extensive interview at the White House on Dec. 20, Peter Navarro, an assistant to the president as director of trade and industrial policy, said there are "no half-measures," and that China has to address all of America's concerns for the two sides to come to terms. Those include forced technology transfers, cyber intrusions into business networks, state-directed investments, tariffs and nontariff barriers.

"China is basically trying to steal the future of Japan, the U.S. and Europe, by going after our technology," the adviser said.

On Beijing's "Made in China 2025" initiative, a blueprint for pivoting the country into a leading position in areas such as artificial intelligence and fifth-generation wireless communication, Navarro called it a "label for a Chinese strategy to achieve dominance in the industries of the future."

While noting that China has recently abandoned public use of the phrase "China 2025," Navarro said that "no one in Japan or the United States really believes that they have abandoned the goals of China 2025."

Pointing to a panel listing 53 examples of China's economic aggression, including items such as "consolidating of state-owned enterprises into national champions," "debt-trap financing to developing countries," and "dumping below cost into foreign markets," Navarro said, "Virtually everything on here is against the rules of the World Trade Organization," and that China would have to address all of the issues "if we are going to have a negotiation that results in success."

The hawkish adviser, whose resume includes authoring a book titled "Death by China," said that intellectual property theft was part of China's culture as a communist state. "It goes back to the communist system, where there are no property rights. If there are no property rights, you can't steal property, right?" he said.

Navarro said that smartphones manufactured by China's Huawei Technologies pose a clear risk in that "those phones can be used to spy on our citizens or our government." He said that the constant software updates were the main source of concern.

On the Trump administration's upcoming bilateral trade talks with Japan, Navarro expressed hope that America's "very large" trade deficit with Japan would be reduced by addressing the primary reason for the imbalance -- automobiles.

A likely result will be "more Japanese car companies invest more here in the U.S." he said. "Not just in assembly parts but also build the engines and transmissions and the electronic systems."

Navarro also said that he hoped American automakers would be able to sell more cars in Japan, but pointed to the "very high nontariff barriers," such as environmental and safety standards, as well as the difficulty of placing cars in showrooms due to the interlocked business relationships in the country that exclude outsiders.

On the U.S. Federal Reserve's decision on Dec. 19 to raise interest rates, Navarro said: "We don't understand why the Fed is acting so contractionary, at a time when there's no inflation to worry about."

Regarding the central bank's forecast for two more rate hikes next year, Navarro said, "We think that's two too many."

Nikkei staff writer Takeshi Kawanami and Taisei Hoyama contributed to this report.

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