Donald Trump and Xi Jinping.
John Manzella, Tribune News Service
President Donald Trump has called out China for unfairly subsidising its state-owned enterprises, not enforcing intellectual property protections, placing trade restrictions on US firms, and pressuring them to hand over technology in exchange for market access. If these problems are eliminated, more US companies will invest there. But is this what Trump wants?
Although we can›t read his mind, the United States-Mexico-Canada Agreement, or new NAFTA, may provide some insight. If ratified by Congress in its current state, the sunset provisions will create uncertainty by making it easier to terminate the agreement. And the weakened investor-state dispute settlement mechanism will make it more difficult to remedy legal battles. Consequently, US firms may think twice about investing in our North American partners. But that›s not all.
The requirement that a significant percentage of automobile content be made by workers paid a minimum of $16 an hour will make production in Mexico even less attractive. As a result, many believe the USMCA is partly designed to discourage US firms from investing there.
If the administration›s game plan is also to deter US companies from investing in China, its demands may be at odds with what it really wants. If the administration›s agenda is to force China to further reform its economy at a quick pace, and in doing so remove trade irritants, it may be disappointed. Here›s why.
Over the past 35 years, China›s economic system has lifted more than 500 million people out of poverty. Much of its success has been attributable to economic reforms that integrated China into the global economy and began transitioning it from a state managed economic system to a more market oriented one. But that reform process has slowed; some argue it has even stopped or reversed.
Economists agree that China needs to restart economic reforms if the country wishes to eliminate many of its problems. And this may be especially true for the country to achieve levels of sustainable growth necessary to absorb new entrants into the workforce each year.
But in the short-term there is a delicate balance between implementing reforms, which often demand reductions in industry support, and higher levels of unemployment, which often follow. Let me explain.
A prime target for reform are state-owned enterprises, which are highly subsidised by the government. As a result, many have become bloated, perform poorly, and put a drag on the economy. On the other hand, they are large employers, provide a degree of stability during periods of slow growth and high volatility, and are a means of control by the Communist ruling party.
If reductions in support were to be implemented, many believe it must occur at a pace that doesn›t cause unemployment, tensions and social unrest to rise — something feared by the leadership.
Government support also gives these state-owned companies an unfair competitive advantage over American firms, as well as privately-owned Chinese companies. Reductions in support would go a long way in alleviating US-China trade tensions.
For Chinese President Xi Jinping, the balance between implementing reforms and maintaining stability could be as dangerous as walking a tightrope in a high wire act. Consequently, it›s no surprise when he sends mixed signals indicating market forces should play a decisive role in the economy, while also stating state-owned enterprises should be stronger.
Although the agendas and abilities of Trump and Xi may not be clear, there are many directions US-China trade and relations can take moving forward. But a path of engagement that enables both countries to work constructively to overcome difficult obstacles would be the path leading to the greatest benefit for both sides.
This week, let’s put down our midsummer cookout plates long enough to remember sacrifices made across generations to secure independence, peace and prosperity. We might also reflect on how British trade interference with goods like stamps and tea helped spark the Fourth of July holiday.
It is unusual for a country to wage war on a company, which makes the ongoing United States-Huawei dispute so strange and disconcerting. The Trump administration has prohibited US firms from doing business with the Chinese tech behemoth and is trying to convince other countries to ban Huawei equipment from their
As US-China friction escalates, the rhetoric in Washington has grown increasingly ugly and hostile. The Trump administration, concerned about intellectual property theft and other questionable behaviour on the part of Beijing, has embarked on a program of targeting students and professionals of Chinese descent.
President Donald Trump’s planned meeting with Chinese President Xi Jinping at the G-20 summit, June 28-29, has created optimism that a deal to restore normal commercial relations may be possible. However, without extensive changes in Chinese policy and law — and tough enforcement provisions — any deal will prove
The choosing of Dubai as the ‘’Capital of Arab Media’’ for the year 2020 by the Arab Information Ministers Council is a well-deserved accolade for the dazzling Emirate.
A cunning rat leaves a sinking ship. Yet it’s a striking feature of today’s Conservative Party that so many are scrabbling to stay aboard their listing vessel instead. Amber Rudd and the ever versatile Matt Hancock have even converted to the cause of a crash-out Brexit, despite previously warning it would be the economic equivalent of scuttling your own fleet at Scarpa Flow.
President Donald Trump’s vicious verbal assaults on four women of colour who are members of Congress have sparked an avalanche of well-earned criticism, including from some of his supporters. As regular readers know, I’m fascinated by history, so I’ve been wondering where Trump’s tweeted comments rank among the most racist ones made by presidents (or successful presidential candidates) during my lifetime.
A lot of people are beginning to think that there is a conspiracy going on against the elderly. Some think that product manufacturers seem not to care, or even forget, that their consumers also comprise people who are older. This criticism has recently been levelled against makers of anti-ageing products.