为何中国不会向特朗普屈服

Apr 17, 2018 Jeffrey Frankel

发自北京——上个月，美国总统特朗普颁布了专门针对中国的钢铁和铝制品关税。4月2日中国宣布对128种美国产品征收关税。特朗普随后宣布对大约相当于500亿美元进口额的另外1300种中国产品征收25％关税。针锋相对之下，中国威胁对美国106种出口产品（包括大豆，汽车和飞机）加征25％关税，一旦美国关税生效就立刻执行。

毫无疑问，一旦这些措施生效，就等于爆发了一场贸易战——而且是一场美国不太可能打赢的战争。

尽管经济学家们普遍认为贸易战中没有赢家，但也有人辩称特朗普的行动是一种精明的谈判策略，以驱使中国调整其贸易政策，例如要求外国企业分享自身知识产权来换取中国市场准入。然而特朗普并不了解这类谈判的基础：他以为拥有贸易赤字的一方必然具备更强的谈判地位。实际上盈余国往往处于强势地位，因为它已经积累了一批对其“对手”的财务权益。

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Jeffrey Frankel

Writing for PS since 2000
157 Commentaries

Jeffrey Frankel, Professor of Capital Formation and Growth at Harvard University, previously served as a member of President Bill Clinton’s Council of Economic Advisers. He is a research associate at the US National Bureau of Economic Research, where he is a member of the Business Cycle Dating Committee, the official US arbiter of recession and recovery.

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The Trump administration's proposed tariffs on steel and aluminum imports will target China, but not the way most observers believe. For the US, the most important bilateral trade issue has nothing to do with the Chinese authorities' failure to reduce excess steel capacity, as promised, and stop subsidizing exports.

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China Adjusts
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The new tax legislation pushed through by Donald Trump and congressional Republicans is virtually certain to raise the budget deficit and, in turn, the current-account deficit. Whatever the resemblance to the Reagan-era tax cuts of 1981-1983, it's not morning in America.

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Robert Wolff May 18, 2018

Frankel fails to address the debts of China and the US and their consequences. While total US debt is 3X the US GDP Chinese total debt is also 3X the Chinese GDP.
The reason for current Chinese debt is heavy investment in their industrial infrastructure as the means to their plan for rapid future expansion; whereas the reason for current US debt is using increased debt to subsidize capitalist profits in the US (through consumer loans, welfare and cheap capital for US corporation) as US industrial output and trade deficits continue to skyrocket.

Thus, the US needs to decrease its trade deficits to stop the ballooning debt, but China needs to maintain its trade surpluses to pay off debts from capital investment intended to bring a future windfall. The US and Chinese strategies and aims are at odds, and China cannot afford to accommodate US wishes that would make their own plan for the future fail.
- Robert Wolff May 18, 2018
  
  (Correction: ". . . as US industrial output falls and trade deficits continue to skyrocket.")
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Bei De Zhu May 2, 2018

Big American importers have for decades mandated that Chinese exporters give up their IP (trade secrets, patents, TMs, copyrights, you name it) as a condition of selling into the American market. If there is to be a reconciliation of the IP lost to appropriation without due compensation, the deficit is a net of trillions of dollars of harm in suppressing the development of IP in China.
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Bei De Zhu May 2, 2018

The widespread practice suppresses and kills off nascent IP portfolios before they can be developed in China. Think of why a T-shirt with a Mickey Mouse graphic sells for 500 RMB in China, and one with a design by the same Chinese supplier sells for $5 retail in America. The damage is real and huge.

Steven Mnuchin should act the fair minded American, and on this trip offer to invalidate, by agreement between nations, all contract terms seeking to rip off China firms of their IP without compensation. What is good must be universal, right?
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Bei De Zhu May 2, 2018

"requirement that foreign companies share their intellectual property (IP) to gain access to the Chinese market"??

Western behemoths have for the last 40 years continued to ripoff Chinese companies of their IP on a massive scale. The practice is insidious and widespread, and prevents the nation from upgrading its IP portfolio. Millions of contracts of adhesion caused many trillions of dollars of IP losses by Chinese companies. If there is to be fairness, how is that to be accounted for?

Just look at the typical T&C (Terms and Conditions) that the major American importers demanded of their vendors, and you will find similar provisions everywhere:

"CONFIDENTIAL INFORMATION; NONDISCLOSURE

Supplier shall not at any time, during or after the Term of this Agreement, disclose to others, take or use for its own purposes or the purpose of others, any of Company’s confidential information, knowledge, designs, data, know-how, trade secrets, or any other information considered “confidential” or “proprietary” by Company. Supplier understands, agrees and recognizes that this obligation applies, but is not limited to, technical information, designs, marketing and financial information, and any business information that Company treats as confidential. Any confidential information, knowledge, designs, data, know-how, trade secrets, or any other information considered “confidential” or “proprietary” by Supplier which the Supplier shall have disclosed or may hereafter disclose to the Company and which in any way relates to the goods or services covered by this order, agreement or contract, shall, unless otherwise specifically agreed to in writing by the Company be deemed to be confidential or proprietary information and further shall be acquired by the Company free from any restrictions (other than a claim for patent infringement) as part of the consideration for this order, agreement or contract. No cause of action will arise on Supplier’s behalf for Company’s use of any confidential information disclosed to Company, and no damages whatsoever shall accrue to Supplier for Company’s use thereof. Supplier shall keep confidential any and all technical processes and information, economic and financial information, designs, data, marketing information, and any other business information that Company treats as confidential furnished to Supplier in connection with this order, agreement or contract and Supplier shall not divulge, export or use directly or indirectly, such information for the benefit of any other party without obtaining Company’s written permission. Supplier shall return all items belonging to Company and all copies of documents containing such confidential information in Supplier’s possession or under Supplier’s control upon request by the Company or termination of this Agreement."

[Note how that "what's yours ends up mine" language is craftily hidden in the middle of the passage. Typical American style drafting.]

You think that is bad? Try this zinger:

"INTELLECTUAL PROPERTY

Absent a separate express agreement between Supplier and Company and after one year from date of importation of Merchandise into the United States which in any way relates to the goods or services covered by an Order, , Supplier will irrevocably grant to Company a full paid up, royalty free license to make, use, sell and offer for sale any such Merchandise free of any claim of infringement or misappropriation of any intellectual property of Supplier. The aforementioned paid up license will remain in effect until the expiration of any intellectual property relating in any way to the Merchandise."
__________________
Can you imagine clauses like that imposed on Microsoft, or Intel, etc., by any Chinese entity without causing a fire and brimstone response?? Yet this sort of chicanery is imposed by major American companies in contracts of adhesion on hundreds of thousands of Chinese exporters year in and year out. The typical Chinese company simply is not in a position to bargain. As a result, China had been ROBBED of trillions of dollars of valuable IP over the decades.

What is good must be universal. If IP is to be protected, everyone’s IP should be protected.
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Paul Friesen Apr 27, 2018

I have very little sympathy for the U.S. as it claims China is "stealing" its technology by requiring technology transfers in return for market access. The world system heavily favours current rich countries, and especially the U.S. They have the power to write the rules, and have used it to maintain the advantages they already have.

Finally, in China, they have met a country both able and willing to stand up to them. I, too, do not expect China to back down. They just don't need the U.S. any more. They can produce many things themselves now, and they have all the rest of the world to trade with to get the things they can't produce. They have their own population as a market.

The U.S. is just going to have to get used to the idea that they are not going to be able to push the rest of us around just as they like for much longer. China, at least, has not so far shown as much of a tendency to do that. Hopefully, it will not develop such a tendency as it replaces the U.S. as the world's dominant power.
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Alex Aslanidis Apr 24, 2018

Is this some sort of joke?

If China sells US treasuries, the Federal Reserve will buy them. China can't limit it's purchases of $ assets without limiting it's exports to the US. Who's gonna replace the US as an export destination then? China can't route it's exports through other countries either if the US reduces it's current-account deficit with all countries, as it should. Finally, why does the writer criticize Trump's fiscal expansion? Does he advocate the US addressing it's trade problems through fiscal tightening? That would bring similar results, just through recession. Is that what he wants?

No matter which way you see it, free-trade advocates are very confused people. In the end, why don't they favor balanced trade? My guess is that their interests lie with the financial sector, i.e. the sector that is going to be reigned once trade imbalances correct themselves.
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asad lateef Apr 24, 2018

White elephant is becoming too old to sustain any further tweet of trump.
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Miranda Xafa Apr 22, 2018

"Republican"? What about the Obama $800 billion "fiscal stimulus package" enacted in 2009?
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j. von Hettlingen Apr 21, 2018

Jeffrey Frankel says the tariffs that China and the US have proposed against one another would eventually lead to a trade war should they be implemented – a war that the US would unlikely win. Nevertheless Trump has support for ramping up the rhetoric from those who resent China’s trade policies, “such as the requirement that foreign companies share their intellectual property (IP) to gain access to the Chinese market.”
Although the US is hopeful that it could come to an agreement with China on trade issues, the author criticises Trump’s lack of negotiation basics, assuming erroneously that the US, “a country with a trade deficit necessarily has the stronger negotiating position,” without knowing that China, “the surplus country is in the stronger position, because it has accumulated financial claims” all the years against its “opponent.”
Indeed, China’s foreign exchange reserves amount to some $3.1 trillion, while holding over $1 trillion in US debt. Beijing could dump its US Treasury securities at a loss. Or it stops buying US bonds, now that US debt is “expanding and interest rates on the rise.” This could “drive down US bond prices and accelerate the increase in US interest rates.” As a result of Trump’s drum of war in recent weeks, financial markets have been jittery lately.
Unsurprisingly China said it was “absolutely not afraid” of a trade war with the US, even though it did not want one. Trump’s pursuit of economic nationalism and protectionist policies will cause the world’s economy to contract. Analysts believe if a full blown trade war is not averted, China could make things difficult for US companies doing business in China, while others say China is more likely seek to avoid escalate tensions. Beijing is aware of a severe impact on the global economy, posing a threat to its recovery.
Due to historical grievances – the “unequal treaties” China had to sign with Britain following its 1842 defeat in the Opium War – Beijing sees this chapter of history as its inglorious past. This “century of humiliation” serves as a guideline for Beijing’s assertive foreign policy since its economic rise in the 1980s. The author explains why China is sensitive towards “trade bullying.” He suggests the US should help China overcome this “legacy of humiliation,” and urges Trump to stop “flip-flopping.”
The author highlights a litany of measures that enable China to win Trump’s trade war. But he urges Trump not to focus too much on America’s trade deficit, as it has little to do with China’s trade surplus, but more to do with Republicans’ disastrous fiscal policy. While Trump’s “complaints” about China’s dishonest means of acquiring intellectual property are “valid grievances,” he certainly is inept at tackling the problem.
In order to stop China’s alleged IP theft, it “requires technical expertise and negotiating skill, not blunt threats based on inadequate knowledge.” The author says Trump’s disdain for “rules-based institutions” like the World Trade Ordanisation could prove his undoing. Trump has in the past alienated America’s allies, who are now badly needed, because many of them “have similar grievances with China.” Only through cooperation with others can a united front be formed and pressure be applied on China.
The author says “the shortcomings of existing trade institutions do not justify resorting to aggressive and ineffective unilateralism. That did not work in the 1980s, when Ronald Reagan’s so-called Voluntary Export Restraints on Japanese goods ended up benefiting Japanese firms, rather than the US, which was better off after they were removed. Nor did it work in 2002, when George W. Bush imposed steel tariffs that cost many more jobs than they protected.”
As Trump loves to be flattered, China might offer him “some face-saving gesture,” but hardly any “substantive concessions.” All these “gleeful photo ops, self-congratulatary tweets, or triumphant Fox News reports” will not “improve America’s external balance, output, employment, or real wages.” But he does not care, because his die-hard supporters would still believe in his ability to deliver.
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Joseph Zorzin Apr 19, 2018

China is not a normal trading nation. All "China watchers" should read "The Hundred-Year Marathon" subtitled "China's Secret Strategy to Replace America as the Global Superpower" by Michael Pillsbury. There is an hour long interview of the author on the Asia Society web site.
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Henry Rech Apr 19, 2018

It is clear that what China wants is western technology/intellectual property - it is even willing to steal it and exploit it without recompense to the owners of that technology. That's Trump's ultimate bargaining chip.
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vivek iyer Apr 18, 2018

This article misses the point completely. China has signalled that all Economic activity will be under Party control and directed specific targets. The logic here militates for American disengagement with and disentanglement from Chinese manufacturing and Knowledge based Services.
It is not the case that China, as a creditor, has a strong hand. The shoe is very much on the other foot- at least, at the moment. Xi may be able to reverse an essentially comprador aspect of Chinese 'Capitalism' . But, there is good reason to think he will fail.
Trump is likely to up his game, concentrating again on the 'Rust Belt', and focusing again on immigration.
Democratic disarray is such, the man may get- and deserve- a second term.
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prashanth kamath Apr 18, 2018

"Why China Won’t Yield to Trump"

It is China, is it? Where an unelected emperor makes policies, it becomes China's policies. On the other hand, Trump, who is the elected president of US does not mean the US.

Well, I wonder where your thoughts are coming from?
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Kien Choong Apr 18, 2018

Thank you for the interesting article, explaining why China is unlikely to back down even if (as a number of commentators have asserted) China will end up worse off in a trade war.

Perhaps another reason why China would not back down is that it simply is unclear what the US's goals are, and how exactly China can help with those goals? If the goal is to eliminate the US's bilateral trade deficit with China, how should China go about achieving this? Even if it could be achieved (doubtless at considerable cost), how would it help the US?

America's problems have to do with inequality and a failure to ensure a fair distribution of the gains from global trade. These issues can easily be addressed by the US government, but only if there is a political will to do this. Despite the rhetoric about loss of manufacturing jobs due to global trade (which I understand was plainly foreseeable), US politicians continue to do little to help its unemployed, prioritising instead tax cuts.

It seems US politicians give greater priority to US corporate interests than to the wellbeing of American workers and consumers. The recurring complaints about IP theft and unfair technology transfer is instructive. These issues concern the interest of US corporations. But the job of China's government is to foster the wellbeing of workers and consumers, not to make life easy for corporations. Corporations that want to invest in China ought to be encouraged/incentivised to transfer technology to China. In fact, the IMF has a recent paper pointing to the importance of technology transfer to development. It puzzles me why so many commentators fail to see that technology transfer is a good thing, not just for China, but for the world.

America squandered the "peace dividend" (following the end of the Cold War) and the "global trade dividend". It could have used the gains from peace and global trade to make US society a more just society. Instead, US have spent these gains on war and on cutting taxes, making the wealthy in the US ever more wealthier!

If corporate interests remains the priority of US politicians, why should China do anything to help the US? Far better that China continues to focus on alleviating poverty in China and the emerging world.
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nigel southway Apr 17, 2018

Most of these writers who scare on about trade wars are all using the globalists thinking model.... stop and think...The US plan is not to get a better trade deal... the plan is to NOT trade as much .... so, tariffs are a good plan... the US does not need to trade to survive... unlike China.

Based on this position tariffs can be made to cost nothing as the revenue from them can be put back into the economy via government to add leverage to the redirection of a more balanced economy. Sure, the global trade transaction skimmers will suffer, and it will look good on them.
- Paul Ross Apr 19, 2018
  
  Current Account Deficit -- National expenditures less National income and savings makes the US HAVE to have a trade deficit.
  
  Until we balance a budget and start writing down the debt, we will mathematically have a current account deficit, and thus a trade deficit. The money has to come from somewhere, although I do have a $1T Zimbabwe dollar somewhere around here...
  - nigel southway Apr 19, 2018
    
    Naw… your using financial bean counting stuff....Well…. use whatever numbers you want….. but if we import less of what we already have in/on the ground and have the skills to finish and make into product we consume and invest more of our wealth in an industry to process those products, and not put our wealth into stupid housing bubbles etc., Then after that we won’t need to export so much to pay for these imports and if we do it well we may be able to pay for the budget that does include items we won’t need if we have a better prosperity from the above process.
    It does mean that we must kill the sacred cow of free trade, but that failed and sick beast will get killed and eaten soon…. I hope.
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- P. Kamath Apr 17, 2018
  
  Nigel: "..the US does not need to trade to survive... unlike China..." Very good point indeed.
  
  Trump doesn't read and is known for his utter juvenile understanding of world history . American politicians have to accept that tectonic plates of power are constantly changing and now new actors demand their rightful place in today's global order. So John Waynesque needs to modified!
  - nigel southway Apr 17, 2018
    
    I have a huge problem with this global order stuff... the unit of management for an economy and the security of the individual is the nation... Its all that works for the mass of the population and let that slip out of focus and we have mahem.
    - lt lee Apr 18, 2018
      
      If the US does not trade with the outside world, the prices of US produced high productivity goods and services in the absence of external demand. At the same time, the prices of foreign produced low productivity goods and services would rise in the absence of external supply.
      
      The US, with 4.4% of the world population and 24% of the world's GDP. The productivity differential between average US workers and the world's average workers is one of the largest. The larger the differential, the larger a nation needs a certain kind of world order to maintain the differential.
      
      As a matter of fact, the US needs this global order more than China.
      - nigel southway Apr 18, 2018
        
        With all respect I just don't understand your logic.... please explain..
        
        In the mean time while you respond…Certainly North America... US Canada (and maybe Mexico) as a trade bloc does NOT need to trade with any other nation unless its for resources not in/on the ground in NA... there are some.. …and we should trade with resources others don't have…. such as hi pro fertilizer and certain oils and minerals etc... but any form of trade that opens us up to labor arbitrage is not an option as it transfers wealth.
        
        If you think otherwise you just don’t get that international trade is only a last option. Trade is not essential …. Transferring IP is fine to help emerging economies if its licensed to use correctly and we get paid.
        
        Trade has increased 8 times since 1980 and we have nothing to show for it other than loss of wealth and un--ecological container ships and unsafe third world manufacturing activity and a polluted planet… also, free flow globalization has also created a population explosion in the emerging nations and we are way past being able to manage this growth and the human migration which is destroying the stability of our mature societies…. So, maybe the only export we should offer is birth control pills!
        
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Michael Public Apr 17, 2018

It is increasingly clear to me that it is increasingly unclear what happens when someone imposes import duties. It depends on too many factors. What is clear, however, is that it disrupts everyone from business as usual.
- nigel southway Apr 17, 2018
  
  If by business as usual you mean allowing the wealth transfer machine to continue then bring it on!
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Peter Schaeffer Apr 17, 2018

In the 19th century the U.S. imposed high protective tariffs on British goods. There was no way the U.S. was going to win a trade war (back then) with the UK. However, the tariffs were highly successful anyway. The U.S. built vast and highly successful industries behind tariff walls. America prospered with high tariffs and the UK declined with “free trade”. Even without concessions from the UK, America tariff policy was a huge success.

Can the U.S. get concessions from China today. That is not clear. However, can the U.S. gain from tariffs anyway? Obviously.
- P. Kamath Apr 18, 2018
  
  Peter: It is interesting at bed times to read about 19th century events - cultural, trade, war, scientific , Indian wars , cholera epidemics , etc. But, can you apply these models , and methods to day's world ? Trade is a two-way street, don't you think?
  - Peter Schaeffer Apr 18, 2018
    
    PK, The world of 21st century is different than the 19th century. However, some things stay the same. In the 19th century, the U.S. pursued its own economic interests and the UK adopted "free trade". The U.S. prospered and the UK went downhill. Now China is "Make China Great Again" by putting its economic self-interests first. The U.S. has adopted "free trade". Predictably, China is rising and the U.S. is falling (with U.S. elites getting ever richer). Self-interest worked 150 years ago. China shows that it still does.
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- nigel southway Apr 17, 2018
  
  Yes. agreed...The one who has the trade deficit almost always gets more of what they want...so in principal the US will get more advantage than china who is very sensitive to exports being maintained and must import to feed its people... looking at the US …the US population may have to pay 10 points more on just some items... but they will all have better jobs and a retooled industrial sector...
  - P. Kamath Apr 19, 2018
    
    Nigel: From your 'CV', I see you are well educated, experienced in developed countries and in China, travelled and an excellent articulate person! You would have made a top Trumpian , if you were an American!
    - nigel southway Apr 19, 2018
      
      Yes.... if I were American I would have voted Trump and for his direction... BUT I am a North American...... with 50% of my economy intertwined with the US so I would say I have some interest if not a say...
      
      Trump is perfect for the US at this time... rough spots and all... I wish we had more of his sort in our leadership north of the border, not the limp wristed, politically correct, going in the wrong direction, not getting it done bunch that are in power at the moment.
      - Paul Ross Apr 19, 2018
        
        Big fan of his thinly veiled racism and bigotry, lack of knowledge about anything he pops off about and outright inability to tell the truth?
        
        You can have him, but don't hold it against us if he won't leave.
        
        nigel southway Apr 19, 2018
        
        It could have been a lot worse…. you could have had another Clinton in the white house...
        
        Seriously …..yes. he is not a polished politico….. but we all need something other than that right now.
        
        His anti-globalization direction has appeal
        
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为何中国不会向特朗普屈服

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The Real Reason for Trump’s Steel and Aluminum Tariffs

China Adjusts

Making America’s Deficits Great Again

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