Jake Werner wrote a teasing article, entitled, China Is Cheating at a Rigged Game - The Trade War Is a Sign of a Global System Gone Badly Wrong, in Foreign Policy, Argument section, on August 8, 2018. The Day 8-8 is recognized as Father’s Day in Mainland China and Taiwan because 8-8 is pronounced as Ba-Ba in Chinese similar to Pa-Pa in many other languages. Werner may have given some logical arguments that the global system has gone wrong but he certainly has not given any hint of how to fix it in his article thus leaving readers in a teased mode. He did, however, point out that there is no analysis on what motivates this Chinese policy. He also stated that the aligned anti-China entities interpreting it (Chinese policy) as ‘cheat’ action actually creates an image which is badly resembling the ‘anti-Chinese racism’ started in the U.S. in 19th century lasted quite a long time in US history. What Werner really achieved in his article with such a title was making readers questioning how was a game rigged and how was the global system gone wrong? Werner did not provide any answers rather he cast a doubt in his title statements.
The global system should be an evolving system supported by all members who voluntarily participated in the system. Any rules governing the system should be developed over time with modifications and improvements introduced by participating members. Certainly large countries with big economies may have more influence on the rules governing the system, but the system must be democratically evolved and managed honoring the principles that all members adhere to with the objective to facilitate trading among members while each will act to provide and protect the interests of its people within the confines of the system rules. So the global system governing trade and economic development can be metaphorically compared to the Father’s Day Celebration, a celebration to honor the fathers who provide and protect his family interests regardless whether the celebration is held on the third Sunday in June as declared by President Johnson of the U.S. in 1966 or on March 19th as originally celebrated in Europe since Middle Ages or on August 8th as the Chinese do. The Father’s Day Celebration (trade) can be conducted on different days with different styles but with the same objective to honor the Father’s deed (protecting his family). The trading game is played by every country with its own trading policy and the global system is maintained collectively by all participating members on a voluntary basis. Every member should adjust its own trading policy to play the game and every member should work together to manage the global system.
The ‘cheat’ word defines a trading action violating fair trade rules without people recognizing it. In global trade, deals are made and accepted voluntarily with due deliberation and negotiation with little chance for ‘cheat’ to occur between two trading partners at any time, never mind over many years. Every country, in fact every trading entity be it a global corporation or a public company or a private enterprise, enters into a deal voluntarily and signs treaties or contracts willingly. In each deal, there is gain or loss interpreted differently by different parties but the fact is each trade takes two or more willing parties to consummate. If any party felt it was cheated by another party, it certainly would not trade with that party again or changing its trading policy. Of course, a trading partner may make mistakes and feel cheated and if that happens over many years over many deals, then the trading partner must have a bad trading policy or an incompetent government. In 19th and early 20th century, China was cheated by her foreign trading partners because her government was corrupt and weak and the foreign countries used gun power to force unfair trade treaties onto her even forcing her to cede trading ports to them and forcing her accept opium knowing opium destroys her citizens. Today, we live under the United Nation and we have World Trade Organization to prevent unfair trade. Hopefully, trading will never be forced with military power.
The U.S. is the largest economy in the world. By and large, she has greater influence shaping the global system, in fact to favor her as a trading nation. If she felt she was cheated then it could only be caused by her bad economic and trade policies. No one could use gun power to force her into an unwilling trade. So the issue is to analyze what did the U.S. do wrong not just blame the global system gone wrong?! Every country wants to develop economically, elevate her technologically and leverage her market for achieving the above goals and bring up her citizens income. Large country has large market thus has more leveraging power to achieve their goals. When China leverages her market for buying high technology content products with technology infusion, the seller has two choices, one is to refuse to sell or two is to sell with an adequate profit which may be big enough to recover the seller’s investment in intellectual properties. American pharmaceutical industry has been successful in doing that both domestically and internationally. Selling hi-tech products running the risk of being copied was one of the ‘cheat’ issue. History showed all developed countries had copied and been copied by other countries. The international patent law becomes a part of the global system. It worked well protecting developed countries but it is also a fair game for hard working countries to catch up. Germany and Japan caught up with the U.K. and the U.S. becoming the developed countries. Now China is catching up with highest patent growth in the world about to surpass the U.S. in annual patent grants. Countries own patents naturally will honor patent laws. A global system cannot be fair if it prevents a hard working country to become a developed country. Developed countries should not form a club to exclude developing countries or prevent the developing from becoming developed.
With the above analysis and Werner’s arguments, it is clear to conclude that the globe system may not be perfect but it is not broken nor gone wrong. The fix for the U.S. trade problem lies in her policies, how to pump the nation’s productivity (education reform, for example, the STEM emphasis), to formulate strategic industry development (for example, emphasizing infrastructure over military development), to urge citizens to save more and to put savings into investment to stimulate technology and economical growth (for example, spending habits and life style moderation) and to reduce debt and over dependency on foreign investments which can turn around leaving the U.S. and going to another country say, China and India, overnight. The current Trade War does not appear as a good long term policy to fix the U.S. trade problems but it may just trigger investors to realize that the U.S. is not dealing with fundamental problems just putting bandages to stop bleeding. I echo with Werner (which may not be made explicit), we should stop anti-Chinese rhetoric or discriminating against Chinese. We should focus on finding fixes. China has her share of problems but she is smartly focusing on fixing the problems rather than scheming to win the trade war. It is obvious from her reactionary and defensive moves dealing with the US initiated trade war while maintaining her nation building objectives.
Ifay Chang. Ph.D. Producer/Host, Community Education - Scrammble Game Show, Weekly TV Columnist, www.us-chinaforum.org . Trustee, Somers Central School District.