CHINA, YOU'RE AN EMBARRASSMENT ON TRADE | OPINION

9/28/18

China’s recent effort to pose as the world’s savior on free trade may work in a country where the government controls the public’s access to information, but the rest of the world isn’t buying it. China has spent decades flagrantly engaging in unfair trade practices, including intellectual property theft, state subsidies of business, and barriers to foreign competitors. And, as the old saying goes, actions speak louder than words.

To the surprise of many, the trade war with China hasn’t halted America’s strong economic momentum. The stock market didn’t even flinch when the recent round of tariffs went into effect on September 24, unemployment continues to fall and economic growth is surging. China, on the other hand, is showing signs of weaker economic growth, slowing investment, and deteriorating profits. Rather than embarrassing itself by peddling its propaganda around the globe, China would be better off putting its own house in order. And a good place to start would be practicing what it preaches in its latest white paper.

In the 71-page document, China calls the U.S. a bully for asking China to abide by the free trade principles it purports to champion. That’s not bullying, it’s accountability. 

Free trade is built on the rule of law: What’s mine is mine and it’s not yours until I voluntarily relinquish it. China has a long track record of not playing by these rules, especially when it comes to intellectual property. Experts might differ on the numbers, but there is widespread agreement that for decades China has engaged in forced technology transfer to acquire billions of dollars worth of proprietary ideas, designs, and information. Nobody has a right to call themselves a defender of free trade until they’re willing to fully respect another’s property rights.

Layer on top of that large government subsidies to China’s businesses and ownership restrictionsthat limit U.S. companies’ access to China’s consumers, and it becomes plainly obvious that China’s professed interest in free trade runs in only one direction.

China's President Xi Jinping poses before a meeting with Mauritius Prime Minister Pravind Kumar Jugnauth at the Great Hall of the People on September 2, 2018 in Beijing, China.

China also claims that the U.S. has “undermined the international economic order” by imposing tariffs on Chinese goods. But that’s news to the rest of the world. While China has loudly complained about U.S. protectionism, the U.S. has signed new trade deals with South Korea and Mexico, is working to conclude a new trade agreement with Europe, and has begun to lay the groundwork for trade talks with Japan. Few countries have been more active than the U.S. in trying to negotiate new and updated trading relationships. The negotiations have been tough, no doubt, but sometimes that’s what it takes to get results.

The U.S. is very eager to undermine one thing: a global trading system that gives China a free pass to shake down U.S. companies for their intellectual property. Just because an economic order has lasted for decades, doesn’t make it right. Sometimes, promoting a future of free trade means upsetting the way trade gets done today. 

For the better part of two decades, the U.S. bit it’s tongue as China violated rules and norms of free trade. Now, for the first time, the U.S. is demanding an end to the stalemate and putting its money where its mouth is. China is not comfortable that somebody is finally willing to call it to account. But being uncomfortable is often the prerequisite to making a change.

One silver lining coming out of this white paper is that China feels the need to represent itself as an adherent of the principles of free trade. That’s a good start, but talk is cheap if it doesn’t translate into action. If China really wants the world to view it as a defender of free trade, it must take clear, verifiable steps to play by the rules of free trade, especially when it comes to intellectual property. Until then, it’s just the world’s loudest advocate for the status quo.