US demands level playing field in China, but can Beijing rein in state subsidies to end trade war?
- United States trade representative Robert Lighthizer has been a long-term critic of advantages given to domestic companies that make it difficult for foreign firms
- China has long been accused of favouring domestic companies, resulting in an unfair competitive advantage at home and abroad
US President Donald Trump has delayed the application of additional tariffs on Chinese imports, citing “substantial progress” in addressing the US demands for structural reform in the Chinese economy. This is the fourth article in a five-part series looking into these demands, which are the conditions for ending the trade war.
1. The US demand: end to state subsidies and a level playing field
Curbing China’s massive subsidies offered to domestic firms has long been a priority of United States trade representative (USTR) Robert Lighthizer in the trade talks with Beijing.
Even before the tariff battle kicked off last year, the China critic had made it clear in 2017 that the US objective should be eliminating unfair subsidies and “non-economic” industrial policy, all of which he described as an “unprecedented” threat to the world trading system.
In a joint report issued last month, the American Chamber of Commerce in China (AmCham China) and the US Chamber of Commerce also called on Washington to push Beijing to remove subsidies that artificially support domestic industries to ensure a level playing field for all companies operating in China.
Since joining the World Trade Organisation (WTO) in 2001, China has often been accused by the US and its allies of a lack of transparency in granting numerous subsidies that favour domestic companies, giving them a competitive advantage in both domestic and global markets.