Priorities in a US-China Trade War

San Francisco / June 15, 2019

I find Donald Trump's trade policies toward China to be very interesting. During the 2016 campaign, he promised to change our trading relationship with China. The relationship has changed. In the past few months, it seemed like the US and China were close to signing a deal. The Chinese withdrew some of their promises at the last minute, and Trump responded by imposing tariffs on Chinese goods. Recently, the Trump Administration blocked Huawei. From the outside, it's unclear if Trump's negotiating strategies are improving the situation. I want to put forward a few ideas to inform this negotiation.

First, we should try to establish an effective enforcement mechanism. This should be one of our highest priorities. China evaded the WTO's enforcement mechanism. Although the Chinese would deny this claim (link), there is very good evidence that China steals intellectual property from American firms and universities. Under the WTO system, there was no effective way to compel China to stop this theft. If the Trump Administration can establish a mechanism that forces China to follow through on their promises, that would be a significant achievement.

 

Second, many people who voted for Donald Trump asked for more jobs. I'm not convinced that a US-China bilateral deal will radically change the trends on job creation. Wages are lower in China. Workers' rights are not as developed in China. It is more cost effective for multinational firms to locate their supply chains in China. The Chinese government also subsidizes Chinese firms. In my understanding, Trump's deal with China would not change that system of subsidies.

Third, is there any potential for China to let American firms sell to Chinese consumers? Could a US-China trade deal let Facebook or Uber operate in China? That would be a significant breakthrough. It would help American firms and workers. It would also introduce a wider range of ideas and perspectives into Chinese society.

Fourth, can a trade deal compel China to stop abusing the human rights of the Uyghur Muslims? The State Department under Trump openly criticized China's treatment of Muslim minorities. The head of the state department's human rights and democracy bureau, Michael Kozak, said, "For me, you haven’t seen things like this since the 1930s” (link). I know many conservatives are reluctant to introduce human rights into trade policy. But I actually think the United States must do more to stop the human rights abuses in the Xinjiang region. Donald Trump is a savvy negotiator. He understands leverage. If he made human rights a priority, he could use this negotiation as an opportunity to change China's behavior.