Dominance of state-owned firms in China must be ‘seriously confronted’, former US trade negotiator says
- Barbara Weisel faces off at forum with ex-interpreter for late Chinese leader Deng Xiaoping over access to the country’s markets and alleged technology theft
- Former translator Victor Gao says Beijing will never succumb to US pressure as surrender would herald the collapse of the Chinese government
A former US trade negotiator on Thursday said the dominance of state-owned enterprises in China must be “seriously confronted” to create a level playing field for US firms, as she clashed with an ex-interpreter for late Chinese leader Deng Xiaoping over the country’s openness to global trade.
Barbara Weisel said a partial trade deal expected to be signed between Washington and Beijing in the coming weeks would not address the fundamental issue in their continuing tariff dispute – that China limits access for foreign companies to its state-dominated economy.
She told a forum in Singapore organised by London-based think tank Asia House that underlying the trade war were various “structural issues” in the Chinese market that needed to be dealt with.
Weisel, who was assistant US trade representative for Southeast Asia and the Pacific from 2004 to 2017, described the deal as “emptier than half full”.
But Victor Gao, previously a translator for Deng and now vice-president of the Beijing-based Centre for China and Globalisation, called US President Donald Trump’s tariff strategy a “wrong war”, and said Beijing would be able to withstand any “collateral damage”.
“China will not buckle under the current trade war, and I think for China to surrender to the US pressure will probably be the collapse of the Chinese government,” he said. “There will be no way for China to succumb.”
America has accused China of unfair trade practices, including theft of intellectual property (IP) and the forced transfer of American technology, leading Washington to impose punitive tariffs on billions of dollars of goods, which kicked off a bitter trade war.
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The two countries have agreed on a phase one deal that would see the US dropping some tariffs on Chinese imports in exchange for Beijing resuming purchases of American farm goods.
Weisel, who was America’s top negotiator under former president Barack Obama for the now-defunct Trans-Pacific Partnership, a proposed trade deal involving 12 countries, said it was “obviously a positive thing that there will be a deal. No additional tariffs are better than additional tariffs”.
But she was quick to add that there were concerns the agreement would not allay fears and uncertainties among US companies. These firms did not have a level playing field in China, where state-owned enterprises received government subsidies, she said. This needed to be “seriously confronted”.
“There are some real issues here that need to be grappled with,” added Weisel, who now leads an economic policy advisory firm. “There is still IP theft on a significant proportion that has not [been] dealt with. But beyond IP, it’s things like investment restrictions, equity caps, all kinds of areas that China could invest in the rest of the world but the rest of the world can’t invest in China.
“If we are all going to have a global trade system that works, you can’t have economies that have large segments of those economies not covered by the same rules.”
But Gao said China was a “big advocate” for global trade and was eager to promote globalisation. He cited the recent China International Import Expo in Shanghai as an example of the country’s openness to the outside world.
“You will see more and more of China coming out of China, and really stretching out its hands to reach all corners of the world,” Gao said.
He also criticised the unpredictability and uncertainty in the global economy arising from the Trump administration’s hawkish strategies.
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“The presumption that the American government will win the trade war with China is a fallacy,” he said.
Meanwhile, amid a tense geopolitical environment, Europe had been sandwiched between the world’s two largest economies, said Anne Ruth Herkes, former state secretary of the German Federal Ministry for Economic Affairs and Energy.
Herkes said European nations had always benefited from Chinese investment but were now caught up in a clash between two major trading partners.
She added, however, that in an “interdependent world”, she hoped China would engage with the globe by creating a level playing field and addressing issues ranging from market access to technology transfers.
Gao responded by saying that the more pressure the international community placed on Beijing, the more it would “reinforce the Chinese resilience in developing self-reliance”.
He warned that pushing for a so-called decoupling of the US and Chinese economies would be detrimental to America.
“Decoupling for the United States and walking away from China will mean a closure of the China market for American companies and products and services. This, in itself, if it ever happens, will be economic suicide for the US economy,” Gao said.
“So don’t push for decoupling. The two countries need to get along.”
