U.S. Defense Secretary James Mattis recently said in his report to President Donald Trump that China’s action such as THAAD retaliation against South Korea can be a threat to the national interest of the United States.
According to the report, certain countries’ industrial policies constitute risks against the industrial foundation of the United States. As examples, it cited China’s soft power based on trade. The report noted that China’s One Belt One Road project resulted in an increase in China's political influence in Eurasia and a decline in the United States’ market access, while adding to trade imbalance with not only the U.S. but also its allies and partners.
The report also mentioned that allies of the United States in the Indo-Pacific region are heavily reliant on trade with China, enabling China to use it to strengthen its soft power. It added China launched an economic war against South Korea after the Seoul government decided to deploy THAAD. Previous similar examples included China’s ban on banana imports from the Philippines during the territorial disputes in the South China Sea, limitation on rare earth metal exports to Japan during the Senkaku Island disputes, continuous threats against Taiwan, and many more.
The report concluded that China’s dominance in trade and its strategy to use trade for soft power enhancement cause the U.S. manufacturing sector and defense industry to rely more on competing countries with regard to important commodities, services and goods and this constitutes mounting risks.
The report is based on the U.S. president’s administrative order in July last year. At that time, he told the defense secretary to analyze risks against the United States’ manufacturing sector and defense industry.