Nikkei Asian Review - US-China -- Compete, Not Cheat

Op-Ed

By Joaquin Castro

For the first time since its inception 25 years ago, the annual Asia-Pacific Economic Cooperation summit concluded without a joint statement by participating countries, including the United States and China.

This sign of growing concern in the region over China's economic practices is accompanied by an increasingly constrained space for economic cooperation between the world's two largest economies.

Is this period of prolonged tension between the world's two largest economies temporary? Or is this the start of a larger downturn in the relationship? Or perhaps part of the natural rivalry between two competitors?

The questions are urgent as U.S. President Donald Trump and Chinese President Xi Jinping prepare for their next face-to-face meeting at the Group of 20 Summit in Argentina, which starts on Nov. 29.

There certainly are fundamental issues the United States has with Chinese economic practices that cannot be waved away. Further, recent actions from both the Republican and Democratic parties make it clear that the United States is fast losing patience with a lack of progress in China on political and economic reforms.

This includes the technology transfer China forces on foreign companies, data localization requirements, and subsidies for national industries that directly hurt the prosperity of American workers. The U.S. Congress passed bipartisan measures to counter Chinese activities, including in defense, development, and investment. Such shared consensus also permeates the debate on the best course of action moving forward.

There is a risk that U.S. policy toward China overcorrects in response to increasing Chinese aggression and assertiveness, moving so far toward antagonism that we invite further conflict.

By initiating a trade war that has affected hundreds of billions of dollars in trade, and pursuing an "us-or-them" diplomacy toward our close allies, the Trump administration has certainly moved in that direction.

But the U.S. must approach China with confidence and not fear. The American people are not afraid of economic competition nor demonstrating our innovative capacity and versatility. It's why decades of American diplomacy supported economic and political institutions across the globe that equally promoted competition and a fair playing field.

Success will require the U.S. to find be confident once again. We can do this while discouraging actions that abuse these institutions through cheating and subverting agreed upon norms. The United States and China should compete, not cheat.

Failing to enforce these global institutions and codes of conduct, or neglecting to build support among our allies to develop new norms, will only open the door to a global institutions shaped by China for its benefit. China is an active participant in the World Bank, the International Monetary Fund, the United Nations, and other International organizations the United States has traditionally benefited from. It has also developed similar institutions of its own. Taking solace in the comforts of isolationism only invites Beijing to step in and reshape these institutions to its benefit.

The American people are not afraid of competing in the global market, but we also expect our economic partners to act legitimately and fairly. As long as the Chinese government pursues policies such as forced technology transfer, economic espionage, and subsidies for domestic industries including steel and aluminum, we cannot consider the economic playing field to be level. Further, such activities will continue to elicit widespread resistance across all levels of American society to greater economic engagement with China.

Despite the escalating economic rhetoric we see, there is room for cooperation between the two countries but the political space is tightening.

The recent breakdown in economic relations follow growing concern in Washington over Beijing's political and security policies. This includes China's actions in the South and East China Seas, decreased political freedoms within China, and a lack of support in addressing North Korea's nuclear and missile programs. The United States and China cannot afford to let these issues go unresolved as we work through economic differences in the relationship. While in the past, the relationship continued due to economic cooperation despite U.S. concerns over Chinese political and security policies, we are now at risk of losing the remaining avenues of constructive cooperation.

A path forward will also require leadership from both Washington and Beijing and a clear expression of interests. For its part, the Trump administration has implemented tariffs on Chinese exports without effectively communicating what Chinese behavior must change for a withdrawal of tariffs. This leads to economic uncertainty and impedes progress on negotiations over U.S. concerns. A failure to set out objectives also promotes the idea that the United States is fighting for the sake of fighting, without a clear aim in mind.

Since the beginning of the trade war with China, Trump administration officials have made a series of trips to Asia to lay out U.S. economic goals. Officials including the U.S. Trade Representative, Commerce and Treasury secretaries, and the Vice President have made the American case, and some have come back with agreements, only to be undercut by the President.

The President has a track record for undermining his own representatives and cabinet officials during negotiations of foreign policy. As a result, we don't know what the words of his cabinet officials and Vice President are worth. Visits from Cabinet officials and the Vice President are helpful, but clear and consistent messaging of U.S. interests will require the President to speak directly and precisely to a degree he has not so far done.

For decades, the United States pursued a policy of expanded engagement with China and support for its economic rise. We did so with the belief that engagement will lead to progress on the fundamental disagreements in the relationship. In recent years this progress has stalled and, in many cases, reversed course.

Despite proclamations from Beijing that China will be the champions of the global economic order, the Chinese economy continues to develop with an abysmal record for economic openness. The case for further engagement will be difficult without credible progress on Beijing's repeated promises to open its economy to foreign participants, with specific plans and a credible timeline. For years, the business community has been the most vocal supporter of a close U.S.-China relationship. The souring opinion of this community speaks volumes about China's lack of economic reform in recent years.

If the United States-China relationship is to be stable and productive for both countries over the next decade, we need to find a framework for cooperation and competition. We must find space for our two nations to compete fairly, frankly, and in a way that promotes well-being from Washington to Beijing.

Representative Joaquin Castro is a member of the House Permanent Select Committee on Intelligence and the House Committee on Foreign Affairs, and founding co-chair of the U.S.-Japan Caucus and Congressional Caucus on ASEAN.

Source