Subtitles section Play video Print subtitles >> Sreenivasan: NEWSHOUR'S SERIES, "CHINA: POWER AND PROSPERITY," CONTINUES TONIGHT WITH ONE OF THE MOST CRITICAL ISSUES RANKLING U.S./CHINA RELATIONS: TRADE. THE TWO NATIONS' DISPUTE HAS LARGELY PLAYED OUT AS A TARIFF WAR, BUT THERE ARE UNDERLYING ISSUES AND ARGUMENTS ON BOTH SIDES. SO, IN PARTNERSHIP WITH THE PULITZER CENTER, WE TELL THIS STORY WITH TWO CORRESPONDENTS, NICK SCHIFRIN AND KATRINA YU. THEY BEGIN IN CHINA'S SILICON VALLEY, SHENZHEN. >> Yu: IN SHENZHEN'S SEG-E-MARKET, YOU CAN BUY ANYTHING ELECTRONIC. THERE ARE TEN FLOORS OF CIRCUIT BOARDS, BATTERY-POWERED CHILDREN'S TOYS, DIGITAL WATCHES, WIRELESS HEADPHONES, EVEN BITCOIN-MINING COMPUTERS. >> Schifrin: AND ALL OF THIS IS SOLD ALL OVER THE WORLD BECAUSE INTERNATIONAL COMPANIES HAVE LONG TAPPED INTO CHINA'S MASSIVE MARKET AND HUGE SUPPLY OF RELIABLE LABOR. >> Yu: IF YOU HAVE AN ELECTRONIC PRODUCT THAT'S LABELED "MADE IN CHINA," THE CHANCES ARE ITS PARTS COME FROM HERE AND END UP ALL OVER THE WORLD, INCLUDING THE U.S. >> Schifrin: FOR DECADES, THE WORLD'S TWO LARGEST ECONOMIES, THE U.S. AND CHINA, HAVE BEEN INTEGRATED. BUT NOW, THE TRUMP ADMINISTRATION IS TRYING TO CHANGE THAT, AND THE TRADE WAR IS NOT ONLY GOING TO AFFECT AMERICAN BUSINESSES AND CONSUMERS. >> Yu: BUT ALSO BUSINESSES AND CONSUMERS HERE IN CHINA. SEG-E-MARKET HAS BEEN CALLED THE BAROMETER OF CHINA'S ELECTRONICS INDUSTRY. COMPONENTS AND FINISHED PRODUCTS ARE SOURCED FROM SUPER-FACTORIES ALL OVER SHENZHEN. MORE THAN 60,000 BUSINESSES HAVE SET UP SHOP HERE. WHILE THEY MAY SELL EVERYWHERE, THIS YEAR, ALL EYES ARE ON THE U.S. >> ( translated ): I HOPE THE TRADE WAR DOESN'T CONTINUE TO GET WORSE. LET'S KEEP A PEACEFUL RELATIONSHIP. DON'T RAISE TARIFFS BECAUSE NO ONE WINS. >> Yu: ALL THE VENDORS THAT WE SPOKE TO BLAME PRESIDENT TRUMP FOR THE TRADE WAR, AND SOME SAY TRUMP FEELS THREATENED BY CHINA'S SUCCESS... >> ( translated ): CHINA'S ELECTRONICS INDUSTRY IS PRETTY GOOD. NOW, TRUMP IS JUST TRYING TO SUPPRESS CHINA'S DEVELOPMENT. >> Yu: ...THOUGH SOME FREELY ADMIT TO SELLING COPIES OF U.S. PRODUCTS. I ASK HER IF THIS IS A GO-PRO. >> ( translated ): NO, IT'S NOT A GO-PRO. GO-PRO IS MADE ABROAD, AND IT'S VERY EXPENSIVE. BUT THIS ONE IS CHEAP, AND IT'S SIMILAR. >> Yu: HOW SIMILAR, NICK? >> Schifrin: WELL, VERY SIMILAR. THE CHINESE SPORTSCAM LOOKS EXACTLY LIKE THE AMERICAN GO-PRO. AT THIS CHINESE NEW BARLUN STORE, TAKE A LOOK AT THE WORDS. THE SNEAKERS AND THE WRITING LOOK AN AWFUL LOT LIKE AMERICAN NEW BALANCE. THAT'S JUST TWO EXAMPLES OF CHINESE COPYCATTING THAT THE U.S. SAYS TURNED INTO THEFT ON AN INDUSTRIALIZED SCALE. THE U.S. HAS INDICTED HACKERS CONNECTED TO THE CHINESE MILITARY FOR STEALING SPECS OF AN AMERICAN POWER PLANT SIMILAR TO THIS MODEL, AND NAVIGATION SATELLITE TECHNOLOGY. AND THE U.S. SAYS THE MOST EXPENSIVE WEAPONS SYSTEM EVER, THE AMERICAN F-35, LOOKS JUST LIKE THE CHINESE J-31 BECAUSE CHINESE HACKERS STOLE THE DESIGNS. THE U.S. SAYS, IN JUST A FEW DECADES, THEFT HELPED CHINA MAKE ITS MILITARY WORLD-CLASS; AND ITS COMPANIES, TECHNOLOGY LEADERS. >> THAT KIND OF TECHNOLOGICAL ADVANCEMENT DOESN'T HAPPEN ORGANICALLY. >> Schifrin: JAKE PARKER HAS LIVED IN BEIJING FOR A DECADE. HE'S THE VICE PRESIDENT OF THE U.S./CHINA BUSINESS COUNCIL, WHICH ADVOCATES FOR AMERICAN BUSINESSES IN CHINA. >> CHINA'S SYSTEM IS SET UP IN SUCH A WAY THAT THE STATE HAS ACCESS TO INFORMATION THAT COMPANIES WOULD CONSIDER TO BE TRADE SECRETS. THE AMOUNT OF INFORMATION THAT'S TRANSFERRED TO THE CHINESE GOVERNMENT GOES FAR BEYOND WHAT WOULD BE EXPECTED IN ANOTHER MARKET. >> Schifrin: AS BUSINESSMAN... >> YOU HANDLE IT, THEN. >> Schifrin: ...AND PRESIDENTIAL CANDIDATE, DONALD TRUMP HAS ACCUSED CHINA OF PURSUING DECADES OF PREDATORY TRADE PRACTICES. >> WE CAN'T CONTINUE TO ALLOW CHINA TO RAPE OUR COUNTRY, AND THAT'S WHAT THEY'RE DOING. IT'S THE GREATEST THEFT IN THE HISTORY OF THE WORLD. WHEN YOU SEE CHINA, THESE ARE FIERCE PEOPLE IN TERMS OF NEGOTIATION. THEY WANT TO TAKE YOUR THROAT OUT. THEY WANT TO CUT YOU APART. >> Schifrin: THE TRUMP ADMINISTRATION HAS INCREASED U.S. DEMANDS THAT CHINA STOP INTELLECTUAL PROPERTY THEFT AND WHAT THE U.S. CALLS OTHER UNFAIR TRADE PRACTICES. THE ADMINISTRATION HAS RELEASED TWO MAJOR INVESTIGATIONS INTO CHINESE CORPORATE THEFT AND LABELED CHINESE COMPUTER, TELECOM, AND TECHNOLOGY COMPANIES RISKS TO AMERICAN NATIONAL SECURITY. >> PRESIDENT TRUMP HAS RAISED ISSUES THAT HAVE BEEN AN IRRITANT IN THE RELATIONSHIP FOR A VERY, VERY LONG TIME... >> YOU KNOW, WE'RE THE PIGGY BANK THAT EVERYBODY STEALS FROM, INCLUDING CHINA. >> ...THAT HAVE NOT BEEN ADEQUATELY ADDRESSED BY THE CHINESE SIDE. AND FRANKLY, THOSE ISSUES GO TO THE CORE OF HOW CHINA'S ECONOMIC SYSTEM OPERATES, ITS STATE-OWNED ENTERPRISE REFORM, ITS