Why the US-China rivalry will not end with a trade deal
Ana Nicolaci da Costa
BBC News, April 21

“A U.S.-China trade deal – if it happens- is unlikely to end the rivalry between the two economic giants. Both sides have fought a trade war over the past year with damaging consequences from the global economy. But many say their dispute goes well beyond trade – it represents a power-struggle between two very different world views. Deal or no deal, that rivalry is only expected to broaden and become more difficult to resolve.”

“The U.S.-China rivalry is likely to play out next in the crucial technology sector, as both sides try to establish themselves as the world’s technology leader. Many say the U.S.-China technology battle is already under way – and China’s technology giant Huawei is at its very centre.Huawei has been the focus of intense international scrutiny lately, with the U.S. and other countries raising security concerns about its products.”

“U.S. concerns about China have grown in recent years, along with China’s influence around the world. Its massive Belt and Road initiative, the Made in China 2025 plans, and the growing importance of companies like Huawei and Alibaba have all contributed to those fears. Some analysts think a stand-off between the two sides was inevitable. Their different systems have always made them awkward bedfellows in the global economy, while clashes between existing and rising powers are common in history.”

“As the technology race gathers pace, analysts expect the U.S. to continue to use non-tariff measures to push back against China. Restrictions on Chinese investment into the U.S., limits on the ability of U.S. firms to export technology to China, and further pressure on Chinese companies are all tools that could be used.”

Pompeo’s remarks show Washington has lost the plot
Xu Bu, China’s ambassador to Chile
China Daily, April 18

“Pompeo’s accusations against China are groundless. He even said that China has killed hundreds of U.S. citizens and abets terrorism. Obviously, the top U.S. diplomat has lost his mind, and gone too far. He accused Chinese investment of being corrosive. But cooperation with China has brought benefits to Chile’s economy. Last year, China invested more than $6 billion in Chile, and the bilateral trade volume hit $42.8 billion, which is markedly higher than Chile’s trade volume of $24 billion with the U.S.”

“Chilean President Sebastian Pinera is scheduled to visit Beijing on April 24 to attend the second Belt and Road Forum for International Cooperation shows that Chile attaches great importance to developing relations with China. Chile will host the APECand climate change conference this year. Pompeo should have focused his attention on theses, and on how the United States can contribute to the fight against climate change and strengthen the process of regional integration. Instead, he chose to attack other countries.”

“I think Pompeo underestimated the memories of Latin Americans by claiming that the U.S. is their reliable partner. Washington has always regarded the region as its backyard, and it has waywardly carried out military interventions in these countries and imposed sanctions on them. Chinese enterprises know that if Chile maintains continuous economic growth and long-term political stability, they can increase their investment in the country. Both Chile and China oppose military intervention in Venezuela’s internal affairs, which should be resolved through dialogue and peaceful means. If Washington really cares about the region, it should immediately stop its sanctions against other countries and adopt measures to promote economic development of Latin America, rather than making empty promises. The times when the US could act as the world’s policeman have gone. Pompeo should cast off his hegemonic and Cold War mentalities.”

Does China’s “Invisible Hand” Steer Funds to State-Owned Firms?
Benn Steil and Benjamin Della Rocca
Council on Foreign Relations, April 16

“As a precondition for any trade deal, Lighthizer insists that China halt aid to state-owned enterprises (SOEs), a practice that disadvantages both domestic and foreign private competitors. China, however, while acknowledging that it subsidizes companies in strategic industries, insists that it does not favor state-owned firms over private ones. “We have no special institutional arrangements,” said a government spokesperson last month, “for additional subsidies to state-owned enterprises.”

“In a competitive market, it is axiomatic that more profitable firms pay lower borrowing rates than less profitable ones. Greater profitability means lower risk of insolvency. Private firms in China are vastly more profitable than state-owned ones. We would therefore expect them to pay commensurately lower interest rates on loans. Yet data shows this is not the case: private and state-owned firms pay almost identical interest as a percentage of their liabilities. This finding is powerful evidence that the government is guiding banks to lend to SOEs on much more favorable terms.”

Peaceful Coexistence 2.0
Dani Rodrik
Syndicate Project, April 10

“Today’s impasse between the US and China is rooted in the faulty economic paradigm I have called “hyper-globalism,” under which countries must open their economies to foreign companies maximally, regardless of the consequences for their growth strategies or social models. This requires that national economic models – the domestic rules governing markets –converge considerably. Without such convergence, national regulations and standards will appear to impede market access. They are treated as “non-tariff trade barriers” in the language of trade economists and lawyers.”

“Peaceful coexistence would require that US and China allow each other greater policy space, with international economic integration yielding priority to domestic economic and social objectives in both countries (as well as in others). China would have a free hand to conduct its industrial policies and financial regulations, in order to build a market economy with distinctive Chinese characteristics. The US would be free to protect its labor markets from social dumping and to exercise greater oversight over Chinese investments that threaten technological or national security objectives.”

Boeing and Its 737 MAX Jets Have a China Problem
Trefor Moss
The Wall Street Journal, April 10

“A state-owned airline is seeking compensation and that could be just the start of headaches for Boeing when it comes to China.”

The WTO Strikes Again
William Alan Reinsch
CSIS, April 8

“Late last week, the World Trade Organization (WTO) issued what the media is calling a “historic” ruling on the applicability of Article XXI, which allows nations to take trade limiting actions in the name of national security. The decision will inevitably be appealed and thus will get caught up in the dispute over the Appellate Body, but it’s worth making some comments now since, even though the case is not about the U.S. steel and aluminum tariffs, the decision has implications for them since they are also being litigated at the WTO, and the complainants are using many of the same arguments.”

“The WTO panel decided that the national security exception is justiciable; it is a standard that is within the WTO’s authority to review and to determine whether a nation’s actions fall within the standard. Having decided that, the panel then went on to review the actions taken by the Russian government and determined that they are consistent with the panel’s interpretation of national security in Article XXI.”

Why Europe Is Getting Tough on China: And What It Means for Washington
Andrew Small
Foreign Affairs, April 3

“Over the past two years, Washington has come to embrace a policy of strategic competition with China. The Trump administration’s National Defense Strategy and National Security Strategy make clear that the United States sees China as a great power rival not only militarily but also in a contest for economic and technological supremacy.”