Strength in Numbers

by Wendy Cutler

Source Link

Tensions in U.S.-China economic and trade relations have steadily increased over the past year, leading to the imposition of tariffs and counter-tariffs impacting nearly USD $400 billion in two-way trade. At the heart of the conflict are challenges posed by China’s state-led economic model, including excessive and under-reported industrial subsidies, operation of state-owned enterprises (SOEs), forced technology transfer, and state-driven strategic guidance as embodied in the “Made in China 2025” initiative.

While the U.S. has been at the forefront of calling out many of China’s problematic trade practices, these policies also impact many of China’s other trading partners, and the U.S. has not been alone in voicing its concerns. The Trump administration, however, has mostly relied on unilateral measures and bilateral negotiations to address them. While there have been some efforts recently to work with other countries, much more could be done to coordinate with like-minded countries to more effectively address the broader structural issues posed by state-led economic policies.

As the U.S. and China appear close to reaching a negotiated settlement, Asia Society Policy Institute (ASPI) Vice President Wendy Cutler makes the case in these newest ASPI issue paper — titled Strength in Numbers: Collaborative Approaches to Addressing Concerns with China’s State-led Economic Model — that now is the time for the U.S. to shift focus to working with allies and partners on these challenges. This paper offers concrete recommendations on ways to work with other countries, including through existing international organizations such as the WTO, the G20, the OECD, and APEC, by forming new “ad hoc” groups, and through coordinated “defensive” domestic actions. By striking the right balance between unilateral, bilateral, and international initiatives, the U.S. stands a better chance of achieving an enduring and comprehensive resolution to these concerns.

The recommendations included in this paper are based partly on two roundtables ASPI organized in Washington, D.C. with experts in October and December 2018, as well as discussions with current and former government officials, private industry, and think tank experts.