Opinion | Let the US and China trade punches, then let the dust settle

Christine Loh says the US is provoking China in several areas, from the trade war and the Huawei case to Taiwan and Tibet. And Beijing is fighting back, but it may well make a trade deal with Washington to stimulate the Chinese economy

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Illustration: Timothy Mcevenue. See: www.timothymcevenue.net

Published: 2:00am, 9 Jan 2019Updated: 3:24am, 9 Jan 2019

A pattern has emerged from the ongoing, extended boxing match between the United States and China. Things are getting trickier and the stakes much higher.

The US has issued a multipronged challenge to China. China doesn’t want to fight but the US has thrown several punches, reaffirming its intention to contain China’s fast-paced development. Some hits can be absorbed or deflected, but some are stinging. China has to be careful not to overreact or underestimate the ramifications.

The US landed the first punch in July, imposing tariffs on Chinese imports, and China set retaliatory tariffs. But November data showed China’s trade surplus with the US increasing. In any event, China is willing to buy more from the US, as it has large energy and agricultural needs that the US can meet. The US is keen to sell cars. China has suspended additional tariffs on American cars and auto parts for three months.

The US accuses China of various unacceptable practices, such as forced technology transfer and intellectual property theft. There are reforms China is ready to expedite. It is drafting a foreign investment law that bans forced technology transfer, strengthens intellectual property protection and gives foreign businesses greater market access.

China and the US agree it is desirable to open up markets and international trade. China argues, not unreasonably, that it needs time to implement reforms. In the past four decades, China has had to establish markets, systems, institutions and regulations and it is still in the process of modernisation.