Donald Trumps phase one agreement with China, expected to be signed this week, is intended partly to slow Chinas move into new technologies like electric cars by protecting the intellectual property of American corporations.
Which lends a certain irony to Teslas Model 3 electric sedans now coming off assembly lines at the firms new multibillion-dollar plant in Shanghai.
The Model 3 marks a huge milestone for Elon Musks company as it rapidly expands in the worlds largest electric-vehicle market. But its not a milestone for America.
The people who are learning how to make electric cars ever more efficiently in Teslas Shanghai factory are Chinese.
The Chinese are intent on learning as much as they can from Tesla and other leading global corporations. And the corporations dont care as long as their investments in China pay off.
Trump is demanding that China provide stronger patent and copyright protections. But the Chinese, who are gaining valuable experience with firms such as Tesla, will take what they learn and apply it elsewhere regardless.
To the extent that those better protections increase the profits of American firms in China, American firms will invest even more in China.
Trump doesnt understand a basic reality of todays global economy: The profitability and competitiveness of American corporations arent the same as the well-being and competitiveness of Americans. American corporations have no particular obligation to the United States. Theyre obligated to their shareholders.
About 30% of the shareholders of large American corporations arent even American. As global money sloshes ever more quickly across borders, that percentage is growing.
The 500 largest corporations headquartered in the United States are steadily becoming less American. Some 40% of their employees live and work outside the United States. They sell and buy components and services all over world. They do research wherever they find talented engineers and scientists.
Chinas share of global research and development already tops Americas. One big reason, according to the National Science Foundation, is that American firms nearly doubled their research and development investments in Asia over the last decade.
They did so because China is a huge and growing market, with an increasing number of talented researchers and well-educated workers.
In 2017, General Electric announced it was increasing its investments in advanced manufacturing and robotics in China, which it termed an important and critical market for GE.
Google has opened an artificial intelligence lab in Beijing, headed by Googles chief scientist for AI and machine learning.
Even when it comes to technologies linked to national security, American firms have no particular allegiance to America. Theyll make and sell anything, anywhere, unless U.S. law stops them.
Last July, the U.S. Senate held hearings on Facebooks planned cryptocurrency, Libra. Facebook executives insisted it be allowed to create the currency or some other country will.
