subramanian22_NHAC NGUYENAFP via Getty Images_china trade agreement

America Should Rewrite the China Trade Contract

Nov 16, 2020 Arvind Subramanian

By Arvind Subramanian

阿文德·苏布拉曼尼亚

新德里 — 即将上任的拜登政府决定要重新加入《巴黎气候协议》、留在世界卫生组织、重启世界贸易组织；一旦作出这些相对简单的决定，拜登政府将面临三大外交政策难题；这三个难题按重要性排序是：中国、中国和中国。

We hope you're enjoying Project Syndicate.

To continue reading, subscribe now.

Already have an account? Log in

Support High-Quality Commentary

For more than 25 years, Project Syndicate has been guided by a simple credo: All people deserve access to a broad range of views by the world's foremost leaders and thinkers on the issues, events, and forces shaping their lives. At a time of unprecedented uncertainty, that mission is more important than ever – and we remain committed to fulfilling it.

But there is no doubt that we, like so many other media organizations nowadays, are under growing strain. If you are in a position to support us, please subscribe now.

As a subscriber, you will enjoy unlimited access to our On Point suite of long reads and book reviews, Say More contributor interviews, The Year Ahead magazine, the full PS archive, and much more. You will also directly support our mission of delivering the highest-quality commentary on the world's most pressing issues to as wide an audience as possible.

By helping us to build a truly open world of ideas, every PS subscriber makes a real difference. Thank you.

Subscribe Now

new comment has been posted. new comments have been posted.

0 Comments on this paragraph, 10 Comments on this article

j. von Hettlingen Nov 22, 2020

Arvind Subramanian says, in the case of China, the genie is out of the bottle. No country - including the US - has the right to “obstruct” China’s economic rise, or “dictate” its development model. In the last two decades, the world has been grappling with an increasingly assertive China, while the US seeks to contain its economic and political rise, which has not been entirely peaceful, given the aggressive nature of China’s Communist Party under President Xi Jinping.
While in office, Trump has taken a more confrontational approach to China, with the rivalry between the two countries evolving into a new “cold” war. Already as a candidate he had accused China of stealing US jobs and trade secrets, vowing to deal with these grievances decisively. After losing to Biden, he has shown no signs of conceding. Many fear he could make more disruptive moves against China that are likely to further strain the tense relationship with Beijing that Biden will soon inherit.
Ten days ago Trump has issued an executive order barring Americans from investing in Chinese companies with ties to China’s military. More steps are said to be in the works before the new administration takes over, making it harder for Biden to roll back certain policies. While Trump’s rhetoric has been bellicose, Biden will soften his tone, but it does not mean that he will be more accommodating of China, as Trump suggests.
The author says “Biden’s dilemma is that China has become too deviant to cooperate with fully, too big to contain or ignore, and too connected to decouple from.” Hence his administration needs a new strategy to engage with China - politically and econompically. He believes that Biden “can and should revise the decades-old contract to account for changed realities. The more China plays by the rules, the more such a revision would benefit developing countries that can trade with it.”
First, it is time for China to ditch its status a “developing country.” As the world’s second largest economy after four decaddes of high and steady growth, it is no longer a poor country. Trump had criticised Beijing for engaging in unfair trade practices by taking advantage of this status, that entitles a country to preferential treatment as an emerging market under the rules of the World Trade Organization and other international agreements.
Second, China has long deviated from “the spirit of the original contract through beggar-thy-neighbor exchange-rate policies (especially from 2004 to 2010) that artificially preserved its economic competitiveness…. The world must respond by codifying and enforcing rules on exchange-rate manipulation.” Due to the blurry line between private and state businesses, the definition of “excessive” intervention “should be widened to include foreign-exchange purchases by state-owned banks as well as those by the central bank.”
Third, the 2001 WTO accession agreement “imposed obligations on China concerning its state-owned enterprises (SOEs). But, with the Chinese state playing a much larger direct and indirect economic role under Xi, these rules have to be adapted, tightened, and made more justiciable. Regarding Chinese investment abroad… the world should treat skeptically China’s claim” that the state is not involved in the SOEs, because they are run on “commercial principles.” The problem is that there is resistance in China to reform in sensitive areas on economic and ideological grounds.
As the Asia-Pacific region is going to dominate global trade, Biden “must therefore consider the regional route that Trump abandoned when he withdrew the US from the Trans-Pacific Partnership (TPP) in 2017. Rejoining its successor, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), would enable the US to integrate more deeply with the rest of Asia and possibly also with Europe, thereby reducing its dependence on China while inflicting de facto exclusion costs on it.”
The US has been left out of the “recent signing of the Regional Comprehensive Economic Partnership, a pan-Asian free-trade agreement including China…. But Asian countries have fewer options relative to China: They are more dependent on and integrated with it, and Trump’s 2017 rejection of the TPP left them without an anchor for managing economic relations with China.” With Trump’s departure, and given "China’s increasing assertiveness, Asian countries might go along with or even secretly hope the US and Europe reset relations with China.”
Biden knows that China is "too important to ignore,"and the "challenge it presents defies easy solutions," and that America and the world should "brace themselves for the long haul."
One can place trust in Biden's skills in managing the US diplomatic relationship with China, which is expected to differ significantly from Trump’s approach. Trump has earned the moniker “tariff man” during his time in office, because of his habit of slapping punitive levies on imports to the US. Undoing some of those tariffs will not be straightforward.
A new reply to this comment has been posted.
Nick Wang Nov 19, 2020

Singapore Prime Minister Lee Hsien Loong hopes that Biden will develop a framework for an overall constructive relationship with China.
This means a relationship in which US and China remain in competition with issues to resolve, but ultimately do not want to collide and will work to develop areas of common interests while constraining the areas of disagreement
https://www.straitstimes.com/singapore/politics/pm-lee-hopes-us-president-elect-biden-will-come-up-with-framework-for
A new reply to this comment has been posted.
Godfree Roberts Nov 16, 2020

China has kept her stringent, unequal WTO commitments far better than the US kept hers.

As for "Xi’s repressive regime is fashioning a new brand of inward-oriented, state-dominated capitalism. And it poses a threat to many of its neighbors, including Taiwan, Australia, India, the Philippines, Vietnam, and Japan”.

Xi's "regime" is neither inward-oriented nor state-dominated and its accession to the RCEP with the Australia, the Philippines, Vietnam, and Japan demonstrates that it is no threat to anyone.

Indeed, China's is objectively the most outward-looking, privatized economy in its long history.

The sad truth is that the American Century ending and the Chinese Millennium is beginning.

We should just relax and enjoy the spectacle.
A new reply to this comment has been posted.
Michael Public Nov 16, 2020

Why remove tariffs? If anything - every country should be forced to put tariffs on China until their imports roughly equal their exports - all countries should operate (more or less) with a quid pro quo arrangement with others. Those who export in an unbalanced manner soon find a new purpose for their new found profits - typically military equipment - and once you are holding a hammer everything looks like a nail.
A new reply to this comment has been posted.
Michael Public Nov 16, 2020

The World? China is 1/5th of the World. Maybe you mean 'The West'?
- P. Kamath Nov 16, 2020
  
  World population is some roughly 7 billion plus hundred million. That is about five times more. No matter what , that is too many! What do you say?
  A new reply to this comment has been posted.
A new reply to this comment has been posted.

https://prosyn.org/35fqTrYzh

Cookies and Privacy

America Should Rewrite the China Trade Contract

To continue reading, subscribe now.

Support High-Quality Commentary

New Comment

Email this piece to a friend

Contact us

Log in/Register

Cookies and Privacy

America Should Rewrite the China Trade Contract

To continue reading, subscribe now.

Support High-Quality Commentary

Edit Newsletter Preferences

Set up Notification