Trump’s Trade Deal
with China is Communism with American Characteristics
Republicans,
who for years held themselves as champions of free markets, embraced central
planning in a new trade deal with China.
The
so-called “phase 1 trade deal”
(pdf) with China was released to the public and signed on 15 January 2020 by US
president Donald Trump and Chinese vice premier Liu He. It is safe to say the
substance underwhelmed anyone looking for more than a sign that the world’s two
largest economies are behaving amicably.
The
fracas started after Trump imposed new import taxes on American consumers and
businesses buying goods from China, and Beijing in turn placed tariffs of its
own on US exports. Trump was concerned about the trade deficit between the US
and China, and that China’s government and corporate powers were stealing US
technology.
The
deal will still keep in place two-thirds of Trump’s new taxes on US importers,
and China has made no commitments to cut its own tariffs. China’s state
subsidies for ostensibly private companies aren’t mentioned in the deal. Minor
changes in China’s investment rules date back to negotiations conducted by the
Obama administration.
The
biggest outcome of the agreement is that at the request of the White House, the
Chinese government will direct its companies to purchase some $200 billion of
goods and services from the US, rather than attempting to set fair trade rules
for competition.
It’s
not clear yet whether those new purchases would exceed the amount expected
without the previous years of trade disruption, or if demand for the goods in
China will match up with the supply of them in the United States.
Trump’s
decision to buy into China’s conception of state-planned trade is an anomaly.
Since the US and China re-established relations under president Nixon, a goal
of the US has been to push the state toward a more liberal economy and
political system.
That
strategy has led to China’s modern conception of state-centric capitalism, and
little political reform—one reason why US critics of all political stripes
aren’t thrilled with the relationship between the two powers.
Now,
China is gaining the upper hand by the exact strategy the US sought to use with
the Trans-Pacific Partnership (TPP), a proposed trade agreement negotiated by
the Obama administration in 2015. It was designed in part to coerce China into
affirming a rules-based international trading system. Instead, China has used
the current trade dispute to force the US into adopting its approach to
state-planned trade.
Democrats
running for the presidency in 2020 promise to put more pressure on China
because of their more overt commitments to including human rights in the
relationship with China. Trump, instinctively sympathetic to authoritarian
regimes, hasn’t made freedom from prosecution or from government control of
business part of his agenda.