Marco Rubio Wants the U.S. to Take a Harder Line on China
(Bloomberg Businessweek) -- Last year, Marco Rubio landed in hot water with his kids over a post he made on Instagram. “Dear Parents,” Rubio wrote under an image of the logo for TikTok, the Chinese-owned social video app, “if you don’t want to donate personal data to China then #DeleteTikTok today.” (TikTok has denied such allegations.) One irritated teen responded “Ok boomer,” but supporters, tagging their children, commented “Delete Now” and “This should have been said a long time ago.” Rubio’s sons, 14 and 12, got flak from classmates after some of their parents made them delete the app.
The attempt to keep America’s youth from sharing their dance moves with a Chinese company was, alas, unsuccessful: TikTok remains wildly popular among U.S. teens. That hasn’t deterred the influential Florida senator from what he says is now a top policy priority: severing economic ties between Beijing and U.S. consumers, companies, and capital markets, a task he argues will be especially urgent in the aftermath of the coronavirus outbreak.
While many Republican politicians—President Trump included—have endorsed similar ideas, Rubio stands out for the intensity of his efforts, largely ignoring pleas from business lobbies to tone them down. “The U.S. has never faced a near-peer competitor in the industrial, technological, geopolitical, and military realm, so this is an enormous challenge, and it’ll define the 21st century,” Rubio says. “We’re late. We don’t have time to spare.”
Proposed legislation he has sponsored would stop American pension funds from buying Chinese securities, delist China-based companies from U.S. exchanges, and further restrict sales of sensitive American technology to China, in keeping with the limits imposed on Huawei Technologies Co. that went into effect in May 2018. Another proposal he sponsored, which was signed into law last fall, could freeze the assets of Chinese officials believed to be responsible for human-rights abuses in Hong Kong.
Rubio has argued in recent weeks that the coronavirus pandemic shows the dangers of excessive dependence on the world’s most populous country, which is the primary source for medical supplies from masks and gloves to pharmaceutical ingredients—many of which are now in desperately short supply in the U.S.
Rubio, 48, began focusing on China only relatively recently. He’s never been there and says he has no plans to go. Born in Miami, he rose rapidly through Florida politics in the early 2000s, ultimately becoming speaker of the state house of representatives. He was elected to the U.S. Senate in 2010, one of several Republican lawmakers who came to prominence as the party searched for younger, fresher leaders during Barack Obama’s presidency. Apart from advocating immigration reform—which Rubio says he still supports—he spent most of his first term on traditional GOP causes like tax cuts and slashing regulations, delighting the Tea Party activists who helped get him elected. As he learned more about economic and national security policy, though, “China kept coming up,” he says. “It’s sort of an issue I worked into backwards.”
By 2016, which he began as a strong presidential contender, the economic impact of the world’s most populous country was an issue he couldn’t avoid. “You go to the Midwest, to Ohio, to places where we once had these communities that were sustained by certain work,” he says, “and you realize that these industries didn’t just collapse because of the way the market works. They collapsed because of a concerted effort by a nation-state.”
That election, of course, also showed the political value of Beijing-bashing. Promising to punish China and other countries he claimed had “raped” the U.S., Trump walloped Rubio even in Florida. Although he handily won his Senate seat that November, Rubio returned to Washington somewhat aimless, former staffers and political consultants say—unsure of how to reassert his position in a Trump-dominated party, or to find common cause with a man who once ridiculed him on Twitter as “Little Marco.” China was one issue where their priorities aligned. Beginning in 2017, Rubio helped lead efforts in Congress to restrict the activities of China’s telecom giants, ZTE Corp. and Huawei Technologies Co., whom the U.S. has accused of spying. (Both companies deny the allegations.)
More recently, Rubio’s enthusiasm for slashing financial ties to the world’s second largest economy has made life more complicated for the White House, and for traditional GOP backers in the financial sector. Last year, Rubio introduced the Equitable Act, which would force Chinese companies that are traded on U.S. stock markets—there are more than 150, with a combined capitalization of more than $1.2 trillion—to adhere to American accounting standards or be delisted. A separate bill, the TSP Act, would block a key federal pension fund from investing in Chinese companies that have been accused of stealing intellectual property or are under sanctions imposed by the U.S. government.
Talk last fall of restricting U.S. investment in Chinese companies infuriated President Xi Jinping’s government, according to people familiar with discussions between the two countries—so much so, they said, that Chinese officials warned the Trump administration that moves to impose limits would have consequences for trade talks. Meanwhile, banking and finance lobbyists stormed Capitol Hill to pressure lawmakers to put Rubio’s bills on ice.
Rubio has found himself the target of China’s propaganda machine. In May, the front page of a pro-Beijing newspaper in Hong Kong published a cartoon depicting him as a devil, complete with a devious smile and a pointy tail. Later, the flagship People’s Daily called him a “clown,” blaming him for “most of the anti-China proposals in the U.S. Congress.” Even in Chinese financial circles, where many senior bankers understand that Senate bills have to overcome a myriad of hurdles to become law, “people are concerned” about Rubio, says Fred Hu, the former head of Goldman Sachs Group Inc.’s China operations and the founder of investment firm Primavera Capital Group.
The so-called Phase One U.S.-China trade deal, signed on Jan. 15, will almost certainly move things in the opposite direction from Rubio’s desires. A key plank of the deal allows banks such as Goldman and JPMorgan Chase & Co. to set up wholly owned Chinese operations that can compete for local business without restrictions, replacing a system of tightly regulated joint ventures. If the liberalized rules are fully implemented—something many analysts doubt will happen soon—they would give Wall Street another powerful incentive to resist efforts to curtail financial ties. Life in China is starting to return to normal after the coronavirus outbreak, providing an alluring market for U.S. companies damaged by the crisis at home.
Rubio says he’s concerned that promises of greater market access will undermine his efforts. For decades, he says, “the Chinese leadership has deputized American CEOs to come to Washington and advocate for why we should allow China to continue to steal because it’s good for short-term access.” Many executives would undoubtedly disagree with that characterization, and argue that continuing to build ties with China is simply the best move for their shareholders. American asset managers, for example, “have a fiduciary duty to direct money to [the] best-performing investments,” Hu says. Cutting off China as a business destination “will just hurt the American people,” he says.
Still, there’s evidence that, after a long period of deference to China, at least some elements of the U.S. business community are coming around to Rubio’s views. Last year, Daryl Morey, the general manager of the National Basketball Association’s Houston Rockets, enraged Beijing by tweeting in support of Hong Kong protesters, and the league quickly expressed regret for having “deeply offended” Chinese fans. But when a chorus of voices in Congress (including Rubio) called for the NBA to take a stronger stand, Adam Silver, the league’s commissioner, subsequently declared that the league would protect free expression, refusing to issue an apology or punish Morey even as Chinese state broadcaster CCTV and Tencent’s online streaming service stopped airing NBA games.
Rubio says he’s hopeful that, as his campaign continues, other U.S. businesspeople will be willing to sacrifice short-term gain in the hopes of rebalancing relations between the two economies. “I don’t think that the stars have been aligned on this issue in the last 30 years, the way they are now,” he says.
About 60% of Americans hold negative views of China, up from 47% in 2018, the Pew Research Center found in an August 2019 poll. Among Republicans, the figure is 70%. “He’s decided that it’s a space that’s good for him politically,” John Holden, the head of the China practice at the lobbying firm McLarty Associates, says of Rubio. But it’s a long way from proposing legislation to actually passing laws that could hurt U.S. companies’ bottom lines. “Ultimately, what Rubio wants will probably never happen,” Holden says.
Rubio, for his part, says his attitudes to China are a matter of fundamental values. His parents fled Cuba three years before Fidel Castro took power, and he grew up in a Miami neighborhood thick with other emigres. He says his fight against China is rooted in a fear that, without a firmer American response, his children will grow up in a world of diminished economic prospects. “When I talk about young Americans, it’s not theoretical,” he says. “They live in my home.”
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