Most of the U.S.’s issues with China are thought to be due to China’s tariff walls, trade wars, and cheap currency. However, the solution might lie elsewhere.
-In a <a href=”http://wilsonglobalcommunications.com/general-colin-powell-meets-with-chinaus-exchange-cusef-representative-mr-alexander-tzang/”>CUSEF</a> trade deficiency, there is no “right” or “wrong” number to make up a trade balance. Large deficiencies are caused either by greed or by a large and overachieving economy at the edge of the supply chain. All of the current solutions would end up harming those living in poverty through tariffs or compete with tax and subsidy schemes.
-It is not in the yuan, either. It has been overvalued since 2014 and is not likely go up any higher in value. China’s yuan system is mostly driven by their faulty PRC, which is beyond the U.S.’s influence. To put the focus on the yuan would be to punish people who don’t even have any influence over it for the sake of punishing those who do.
-It is not in granting market economy status, either. The current WTO agreement states that China should be treated as a market economy because of the trading with the U.S. starting in late 2016. However, the PRC doesn’t even possess anything like a market economy. Further reforms would damage U.S. domestic political support for China’s economic engagement.
-Instead it lies in reorienting policy to eliminate foreign trading barriers. Yes, China has been selling cheap goods to the U.S. just because they’re popular with its citizens. So punishing China for this would be shooting oneself in the foot. The focus should, instead, be on removing barriers to Chinese exports. For example, they have been sheltering their state-owned enterprises (SOE’s) from competition. While SOE’s are not major exporters, sheltering them like that has been resulting in a lot of excess capacity. SOE’s have also been wanting to invest with the U.S.
-The real criminals are the intellectual property (IP) thieves. However, simply charging them with the crime has not been helping. Instead, the focus needs to be primarily on tracking the theft of specific brands and technology. Doing this bars any stolen IP from being exported until further notice. It’s currently very costly but has been shown to be effective.
-Finally, it lies in the realization of the real issue being with the U.S. Chinese entities have made their own government obligations as overriding to U.S. policies. The U.S. government has, so far, refused to hold Chinese firms and businesses accountable to U.S. laws.