President Trump claims that China is stealing intellectual property from the United States, and Vice-President Pence even said that Chinese people lack creativity, in other words, China’s progress today is based on stealing inventions. What does history tell us?
 
Everybody knows that silk and the cultivation of silkworms is a Chinese discover. China is famous for porcelain and tea as well, and it took Western countries a long time before they managed to copy silk, porcelain and tea. In this sequel I will mention a few of the inventions where China was far ahead of the rest of the world. In many cases these Chinese inventions were imitated by other people.
 
The Chinese were already making cast iron in 300 BC, about 1700 years before Europe. They maintained the necessary high temperature with so-called double acting piston bellows. Whether you push or pull the handle, it will always blow into a combustion chamber. This machine is discussed in chapter five of the classic Daode Jing.                                                                                                      
 One cast iron product was used to make salt. In Sichuan salt was produced by drilling a hole all the way into underground layers of salt. The drill bits were made of cast iron suspended from bamboo ropes. Brine was pumped up from these holes and evaporated in large cast iron pans, heated by natural gas from other boreholes. The whole salt, gas and iron industry was nationalized by Han Wudi in 119 BC. Today’s drilling for oil can be traced directly back to this Chinese invention, for it started immediately after the missionary Laurent Imbert described the technique in detail in 1828.
 
China developed iron plows in East-Zhou. In the Western Han Dynasty (around 200 BC) there were already four different types of plow. Dutch sailors brought these plows back to Europe in the 17th century, probably after having seen them in Taiwan. These plows (called ‘Dutch plows’!) were twice as efficient and so one needed less animals and less meadows to feed them. This caused a revolution in European agriculture.
 
From the 2nd century AD on, Chinese ships had watertight compartments that divide the space inside a ship. If these are not connected to each other, the ship won’t sink if a part of the hull is damaged. At the end of the 18th century Benjamin Franklin and others recommended that shipbuilders should learn from China to build ships with watertight compartments.
 
Long ago European horse drawn carriages could not carry much weight. If the horse had to pull too hard, it could not breathe because of the belt around its neck. The Chinese used a horse collar, so the horse would pull with its chest. Another Chinese invention was stirrups (mass produced from cast iron!). With stirrups riders were much more stable on their horses. These inventions arrived in Europe in the 6th century AD and immediately became popular.
 
Paper is well known to be a Chinese invention. Invented already in the Han dynasty, the Arabs learnt the technique from the Chinese around the year 700, and managed to keep it a secret for about five centuries. Not many people know that toilet paper (unknown in the West before the 19th century) was already in use in China in the 6th century. Wallpaper, playing cards and paper umbrellas are other paper products directly copied from Chinese examples.
 
The British introduced the so-called civil service examination in the 17th century, and that was directly copied from China. There all officials had to pass an examination, and this practice had started in the Sui dynasty (about 600 AD).
 
The oldest known printed book is a copy of the Diamond Sutra, printed in 868. How the technique of printing arrived in Europe is unknown, but it suddenly appeared in Europe after the Mongolian army had reached the German borders.

In the Song dynasty China reached its peak in science and technology. Here are some examples.
1.  Movable type. This was invented by Bi Sheng in 1045 AD. It did not become popular because Chinese has so many characters and it is sometimes more practical to use block printing. Gutenberg invented printing with movable type in 1448 AD. He may have been inspired by Arab bookmaking.
2. Paper money. Some Sichuan rich merchants issued bills of exchange, but their company was confiscated and their system was ‘nationalized’ in 1023 AD, so these bills later became official banknotes.
3. Magnetism. In the Han dynasty a kind of magnetic spoon was used for Fengshui, but this had evolved into a magnetic compass by the 10th century. A book of 1117 AD mentions a government regulation saying that sea-going ships should have a compass. That is just about the time that the compass suddenly appears in Europe together with another Chinese nautical invention, the stern post rudder.
4. Pound lock. The Grand Canal has sections of different level. It was difficult for ships to go from one section to another. In the Northern Song Dynasty, Qiao Weiyue built (in 984 AD) a so-called pound lock (two sluice gates close to each other). After the ship enters the lock through one gate, the gate is closed, the water level in the lock is changed and then the ship can leave through the other gate with a small loss of high level water. 400 years later this was copied in the Netherlands.
5. Gunpowder and firearms. Many people know that gunpowder is a Chinese invention, but they think the Chinese only used it for fireworks. Not so. After the invention of gunpowder (ca. 800 AD) it was immediately applied to warfare. An early use was incendiary rockets. So-called fire lances were long pipes filled with fast burning gunpowder. This weapon evolved into the cannon by the 13th century. After the Chinese mastered the art of making explosive gunpowder they developed all kinds of bombs. European firearm technology started suddenly, and when one sees a German 1450 woodcut showing a cannon that looks exactly like a Chinese cannon of 50 years earlier, then one understands why.

 
Western science expanded from the combination of Greek geometry and astronomy with practical applications and systematic experimentation. China had enough mathematics to serve as basis for science, not geometry but advanced numerical mathematics. Chinese mathematicians solved routinely higher degree equations by approximation and in 200 BC they were already calculating with negative numbers, that’s about 1800 years before Europeans did so. Why then was there in China no spark between theory and practice that produced science?
 
The Ming Dynasty reversed the Mongolian discrimination against the Han people. It reinstituted the examination system, but merely tested Confucianism by letting candidates write so-called eight-part essays. Personal opinions were not allowed. There is nothing wrong with Confucianism but you can’t solve all problems with quotations from Confucius. In the Ming Dynasty all intellectual force was channeled into memorizing Confucianist writings and becoming an administrative bureaucrat. There were people in China who understood that this was no good. I mention Gu Yanwu (1612-1683) and Song Yingxing (1587-1666, writer of Tian Gong Kai Wu), but they were powerless. The Qing Dynasty (after 1644) was even worse. In 1793, the British sent Special Envoy Macartney to China. He gave a letter from king George to emperor Qianlong to ask for more trade. He also brought various advanced instruments as gifts. However, Qianlong answered that China already had everything and did not need trade. This set the stage for the later humiliation of China.
 
Imitation of an advanced civilization is not surprising. The West has copied many inventions from China. Once the British accused Germany of imitation, and after the Second World War Western people laughed at Japanese imitations. Now they say that Chinese can’t innovate. Of course, the past success of China doesn’t prove that Chinese are naturally more talented. Different ethnic groups may look slightly different, but people’s brains are in average the same, even if their skins are paler, their hair more like straw and their noses stick out more than those of others. However, the Chinese have a tradition of hard work and diligent study and this certainly contributes to the rapid development. And most important of all, they remember the lessons of history and are determined not to repeat their mistakes. 

Abstract
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Trading is a human trait ever since humans formed societies. Trading is a bi-lateral act accomplished by negotiation and failing negotiation leads to trade war even military war. Why does a self- proclaimed great negotiator, President Trump, want to abandon negotiation to initiate a trade war? Can trade war adjust trading pattern and correct trading results? This article discusses the US-China Trade Issue. The trade imbalance between the U.S. and China is not simple as import-export figures indicate nor true as the rhetoric, “American jobs are stolen by China”, claims. Labor intensive industries migrate. New Industries require innovation and hi-tech components to be competitive. High-tech industries do create new jobs but will eliminate jobs as well. Using trade war to force China to stop her innovation program,”China manufacture 2025”, or to deny China to use her market to attract capital and technology investment is not only unfair but also will not be acceptable by China obviously. With analysis and arguments this article concludes that trade war policy does not solve the US trade problem nor help her industry revitalization.
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Trading is a human trait ever since humans formed societies from the Stone Age, through the agricultural era then to the industrialization centuries. Human civilization advanced by creating and embracing technologies which ever more enhanced the necessities of trading. Trading is a bilateral act consummated by negotiation under a mutually agreed trading system involving transportation and distribution logistics and financing and payment mechanisms. When negotiation is abandoned, history showed us, trading war begins harming human societies to a pain level that a military war may occur. The two past world wars were clear evidence of that. Today, our world is witnessing a serious trading war launched by President Trump of the U.S. Why does a self proclaimed great negotiator want to abandon negotiation and initiate a trade war? This is a puzzling question we need to find an answer.

For the benefit of doubt, since the trade war is just launched, we may speculate that Trump’s trade war is really a part of his negotiation tactics. Then why does Trump have to resort to trade war to adjust trading pattern and to correct trading results?  Trump’s tariff on aluminum and steel not only punishes China but also impacts Canada, India, Mexico, and Several EU countries. The 25% tariff on 34 billion Chinese goods has triggered China’s retaliating reaction but Trump has added 10% tariff on $200 billion Chinese goods which are still being tabulated by the Commerce Department. This type of rash behavior can hardly be seen as the action of a rational government practicing a deliberated thought process to develop trade policies. Of course, no one has enough information nor any psychic power to read into President Trump’s mind to know the answers to the why questions.  As a citizen one has the right to analyze the trade issue at hand based on common sense and voice one’s opinion whether the government’s current trade policy hurts the U.S. or not.

President Trump seems to feel that the U.S. has been taken advantage of by the world for too long in trading (“allowed by the previous administrations”) that it is difficult for the U.S. (for him as President) to correct the ills without taking extreme measures; in his view, the extreme measure can include denying all previous trade agreements and starting from fresh using trade war as a tool to pressure the trading partners since the U.S. has a large market. However, trade agreements and trade practices were accepted willingly by trading partners through negotiations. It is hard to believe that the American people involved in the past trade negotiations were all dummies who would give away the store for not getting anything in return. Looking back we see that the U.S. has always held a strong trading position with her abundant agricultural products and energy resources, despite of an oil cartel and many countries desire to have self sufficiency in food supply. The U.S. conscientiously lets her low-tech labor intensive manufacturing industry disappear and deliberately maintains her hi-tech capital intensive industries to flourish and lead the world. The U.S. also created and excelled in a sophisticated financial industry attracting capitals to the U.S. either for investing in her risky hi-tech development or for financing American debts.

There is nothing wrong with the above strategy except one must realize that every developing country in the world is trying to move up in the technology ladder to take advantage of productivity gain from technology rather than being satisfied with maintaining low-tech industries to produce cheap goods for the developed nations. The above U.S. strategy has been working for decades in favor of the U.S. so long as the advancement and innovations in her own hi-tech industries can keep ahead of the competitive followers. When competitors caught up then the U.S. may lose. For example, the American auto-industry used to dominate the world until competitors crushed them. American airplane industry can export one plane worth more than million pairs of shoes or pants imported if no competitor is behind. With smart marketing and trademark protection, some vast amount of low-tech products imported into the US market is creating huge profits for American companies. For example, a pair of Nike sneakers is typically sold at prices of multiple times than their import value making a huge profit for Nike and its stock holders but no benefit for American workers who lost their Nike jobs. The no brand imports, of course, do contribute to trade imbalance, but their low prices (say shoes and pants) actually benefit lower income Americans who can only afford the cheap imports.

The issue of trade imbalance between the U.S. and China, therefore, is not as simple as the import and export figures indicate nor as “American jobs stolen by China” as retorted by Trump in his campaign. Labor intensive industries face the challenge of labor cost thus they migrate from developed countries to developing countries as a natural economic movement. Any government protection scheme including tariffs can only slow down their migration a bit but eventually fails. This phenomenon existed for many decades and the only sensible solution is to create new industries based on hi-technology components to maintain a competitive edge or gain higher productivity. However, hi-tech industries may create new jobs but they may also eliminate existing jobs especially labor intensive ones. Apparently, China has learned from others’ experiences, she is launching a technology and innovation drive (“China Manufacturing 2025”) to upgrade their industries to higher value chain but with a focus on achieving a net job increase not job loss. This is nothing new; Germany has her German Industry 4.0. In U.S., the government neglected the manufacturing industry for years in favor of financial industry resulting in today’s dilemma: The U.S. highly depends on manufacturing imports and financial product exports. The imports are more physical necessity products and the exports depend more on a debt ridden society (like the U.S. highly depended on debt refinancing to get by). 

So Trump’s attempt to use trade war to stop China Manufacturing 2025 and force her to open up financial markets is not a logical policy; not only China will not accept it, it also does not necessarily help the U.S. The sensible solution is to accelerate technology innovation and sell more (rather than restrict) high-tech sales to China. China recognizes the value of her market size, capable of attracting technology companies to come to China to make and sell hi-tach products. Technologies are protected by patents but patents are just a piece of paper without markets to accept their applications. The U.S. should exploit the huge market in China to sell her technology products to make profit and sustain her technology development to maintain her leadership position. For example, GM makes 10 million cars; 4 million are manufactured and sold in China. The question is whether GM is plowing back its profit to develop advanced technology to maintain a technology lead or simply to distribute its profit as dividends. Tesla with its technology lead in electric vehicle is setting up manufacturing factory and research and development center in China. Obviously, Tesla is valuing China’s market thus ignoring President Trump’s pledge to keep manufacturing in the U.S.

The above discussion is just common sense analysis not deep economic theory, but it is sufficient to tell us that Trump’s trade war policy does not solve the US trade problem nor help her industry revitalization. The U.S. needs to understand China’s market value and the scope of China’s 2025 manufacturing industry upgrade. The U.S. should come up with her industry policy to leverage her lead in many technologies and to take advantage of China’s market to accelerate manufacturing of technology products, develop and sell products for Chinese markets and sustain her lead in technologies.

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Now look at it from the other side. The world has seen famine and starvation for centuries. The populated nations with limited farmland like China, India, Japan, etc. must have sufficient agricultural products to feed their citizens. Their policies can only fall on two choices, one to work hard to produce their products to trade for food and other resources lacking; and the alternative is to develop their own agricultural products to feed themselves. The former case depends on a fair stable functioning trading system free of price manipulation and trade barriers. The latter approach is hard to achieve but necessary if the trading route is not reliable. The U.S. has always been in an envious position regarding agricultural industry. Why today many nations, including China and Japan, work extremely hard to develop their own agricultural industry, even limiting importing the abundant US agricultural products? This is an RTP question to be pondered. Did the U.S. do something wrong in her policies? Why do the other countries feel insecure to rely on US agricultural supply? Now with trade war looming, a serious RTP should be made on these questions immediately to avoid a trade war or a military war triggered by food supply.

As countries develop, they move up in the technology ladder. The U.S. has been leading in many technologies and certainly understand the phenomena of obsolesces created by technology advances. Come with technology advances, there is productivity gain but unfortunately often incurring loss in manual jobs. That is the fact of life; every developing country is pursuing that route knowingly. It is the government and industry leaders’ responsibility to manage the development process. A technologically advanced country must be prepared to maintain her advancement and accept other countries catching up in some technologies. This will happen within an industry and selectively industry by industry; ultimately the process will make some industries disappear in hi-tech nations. If a high-tech nation cannot create new jobs and new industries to replace the lost ones, there will be a serious social problem. Again this is a fact of life and one cannot blame other countries for losing an industry or its jobs. The hi-tech nation must accept this outcome and try to fix this problem with innovation. Keep developing hi-tech products and selling to low tech countries is the logical way of keeping the hi-tech industry growing. Restricting hi-tech export and forcing other countries not to pursue technological advances do not seem to be logical nor fair policies. One must apply the RTP and figure out complimentary technology development since no country can monopolize all technologies either due to limitation on natural resources (such as oil or rare earth metal) or lack of educated or trained talents.

As reflected in the stock market, hi-tech and innovative companies drive the economy. That is the fundamental reason that nearly every nation wants to move up in the technology ladder if possible. It is no surprise that China and most developing countries are pursuing technology development and innovation. To help their progress, they use their markets as a leverage to obtain technology. The U.S. considers that an unfair practice from a technology leader’s perspective. But let’s apply RTP on technology and market holders. Technology is protected by patents. Presumably patents can enable hi-tech product manufacturing but hi-tech products need markets. Without market, product is useless then patents become worthless. Therefore, countries with markets can use market value to bargain and gain technology value. History tells us corporations sometimes buy and bury patents to protect their existing products and their market share. This corporate practice may prevent competitive products to surface for a while but eventually the corporations will get beaten by the startups unless they strive in innovations continuously. The startups must find their market place to grow. This process has no national borders in today’s world. Technology companies must find market place to make profits as long and as fast as they can before competition arrives. To deal with competition, one must keep inventing and innovating to stay competitive or move on to a newer and higher technology territory. Countries are just like collection of corporations; they should not thwart other country’s competitiveness which is the impetus for technological advances. Therefore, technology leading countries have no choice but work in the same way like hard working startups to compete and to keep moving up in the technology ladder.
 
China has been growing fast in the past several decades. They have cleverly recognized the value of her market size. Perhaps learned through her sad experience in late 19th and early 20th century when the Western powers forced her to open her markets under naval guns. Japan is a living case for striving in technology acquisition and eventually developing her own technology in certain key areas. If Japan can succeed, why can’t China succeed since China has far more natural resources and human talents than Japan does? It is understandable that China is not only protective of her markets but is also strategically leveraging her markets for gaining technology advances. For example, in the area of high-speed railway arena, Japan’s fast bullet train was leading the world competing with France. Now decades later, China has surpassed them to be the leader of high-speed rail. China has the need for high speed public transport because of her large population and vast land area. The government made conscientious decision to develop the technology to serve her own market. Now they can export that technology. The U.S. with just as big land mass also has a need for high speed public transportation, but why isn’t she developing her high-speed rail systems? Some blame the US auto-industry which pushes for high-ways and automobiles than for rails and trains. The question is what should the U.S.do to correct mistakes of public transportation policy and stay competitive?
 
The electric cars, buses and trains are the next wave of new technology. It is never too late to do a RTP to figure out a sensible approach. The American electric car company, Tesla, elects to build a huge 500,000 vehicle manufacturing factory in Shanghai, China to address the need of a strong Chinese electric car market, will they succeed like IPHONE becoming a dominating technology product making vast amount of profit? IPHONE faces competition from Huawei and Xiaomi and Tesla probably will have a strong competitor as well. But so what, while one is leading in technology, it can open markets and make profit, the important thing is to plow back the profit for new technology development rather than just paying back to shareholders or greedy investors. In fact, conducting a RTP will yield simple conclusions: technologies bring progress to civilization but inevitably always bring competition as well. One must accept competition as a fact of life. Face it to succeed or retreat to failure.