The key question following the recent meeting in Argentina between President Donald Trump and Chinese leader Xi Jinping is not just whether there will be a deal to lift tariffs and de-escalate the U.S.–China trade war but, also, what the terms will be.
Yet, Summers argues that “it is also easy to sympathize with Chinese leaders who insist that China’s political system is for it to choose, and that economic negotiations should focus on the pragmatic identification of win–win opportunities, rather than on questions of ideology.”
No, China’s economic and trade policies aren’t entirely for it to choose—not if it wants to remain in the WTO and enjoy the open market access that WTO membership confers. Joining the WTO requires following a set of rules that are designed to enable market-based trade. It doesn’t allow agreeing to such a system with one’s fingers crossed behind one’s back.
And when it comes to pragmatic identification of so-called “win-win” opportunities, Summers sounds like so many Chinese officials who spin mercantilist practices, such as forcing foreign companies to transfer technologies to Chinese partners, as a “win-win.”
There is a well-known joke in the business community and among China experts that when Chinese officials talk about “win-win” scenarios, they really mean China gets to win twice.
China knows the practices in question—such as theft of U.S. intellectual property, compulsory joint ventures with forced technology transfers, and massive and unprecedented subsidies to state-picked industrial champions—are not win-win. They are win-lose: Chinese firms win, and foreign firms, including U.S. firms, lose.
Be that as it may, Summers counsels there is nothing the United States or the rest of the world can do to stop China from becoming the largest economy on the planet. That’s true: China has a population of 1.4 billion—four times the U.S. population—and its economy is growing faster. But that isn’t the point and never has been.
Summers and others imply that the Trump administration’s goal is to “hold down” the Chinese economy. That just plays into the Chinese government’s narrative that China is the victim here, and U.S. tariffs are just one more insult in a long list of examples of foreign imperial aggression.
I don’t believe the Trump administration’s goal is to hold down China; nor is that the goal for most advocates of a “get tough” approach to Chinese trade. The administration’s true goal is simple: China needs to stop cheating and start playing by the rules of global trade. Rules like “don’t steal intellectual property.” Rules like “when trading partners open up their markets for your producers then you need to reciprocate by opening up your markets to them—with no strings, such as forced tech transfers, attached.” And rules like “hold subsidies for your domestic industries to some reasonable limits.”
Finally, this is not a fight about the goals of China’s high-tech strategy, known as “Made in China 2025;” it is a fight about the means by which China goes about achieving its objectives.
Only China is willing to throw away the Marquess of Queensberry rules of fair competition and try to get ahead by illicit means like industrial spying.
It’s time for China to start acting like a globally responsible trading partner. If it does, then the Chinese economy and the world economy will be better off.
