A Trade Deal Meant to Heal Rifts Could Actually Make Them Worse

Even within Wednesday’s deal, China has negotiated itself an out when it comes to its commitment to purchase $200 billion more in American goods. The agreement says that actual purchases must be “based on commercial considerations,” meaning China could still object to price and terms.

The pact showed that China could not be bullied and that the United States “is learning to live with China and accept China on its own terms,” said Andy Mok, a geopolitics and trade specialist at the Center for China and Globalization, a Beijing research institute.

Chinese officials have not been intransigent. In recent months, even before they signed the trade pact, they loosened government limits on foreign companies in the auto and financial industries and pledged to outlaw efforts by Chinese companies to force foreign partners to give up their most sensitive trade secrets.

On the major issue of government support and control of the economy, however, Beijing has hung tough.

The Trump administration and American companies have complained that China unfairly uses the government’s vast coffers to build up industries that will directly compete with established players in the West. China downplayed those efforts in recent years as trade tensions rose.

Now China appears to be less shy about its efforts. Early in the trade war, Xi Jinping, China’s top leader, publicly visited a Chinese semiconductor business, an industry that Beijing has showered with subsidies, to show his support. New data shows that China has ramped up its Belt and Road Initiative, a Beijing-driven plan to finance and build highways, telecom networks and other infrastructure throughout the developing world, clearing the way for more Chinese exports.

The price of China’s tough stance is the reordering of the global supply chains that its factories have long fed. Companies had kept them in China even as wages and other costs surged over the past decade.

Article source: https://www.nytimes.com/2020/01/16/business/us-china-trade.html?emc=rss&partner=rss