Trade experts tackled the bilateral trade war, which has lasted for more than a year, during a panel discussion Wednesday.
Trade experts debated whether the U.S. is justified in pushing back against China’s economic and trade policies during a panel discussion at the Information Technology and Innovation Foundation (ITIF) in Washington, D.C., on Wednesday.
The bilateral trade war is now about 15 months old, after the U.S. first imposed Section 301 tariffs in March 2018 and China responded with its first retaliatory tariffs in April 2018.
The trade war isn’t addressing the economic problems most relevant for the U.S. working class and is uplifting U.S. multinational corporations “without regard for working people,” Center on Budget and Policy Priorities senior fellow Jared Bernstein said during the discussion.
“If the U.S. succeeds in protecting intellectual property, for example, from joint venture agreements, simple logic suggests there’ll be more offshoring, not less,” Bernstein said. “Technology transfers threaten the profits of these companies.”
Further, U.S. opposition to China’s state subsidies simply reflects an antipathy to a different economic model than the United States’, Bernstein said.
A common criticism of China by many U.S. analysts is that Beijing picks winners through its subsidy policies, even though the United States’ tax code picks winners based on what firm has the most connected tax lobbyists, as opposed to any sort of thoughtful industrial policy, as China has adopted, Bernstein said.
“If we just shifted our framework vis a vis our relationship with China and more of a cooperation or unifying between working classes here and there, we would begin to understand … that intellectual property diffusion is a positive,” he said. “The improved living standards that these policies can yield and have yielded in China is also a plus.”
ITIF President Robert Atkinson said the U.S. should be confronting China’s “mercantilism” and innovation strategies.
He said China has been stealing U.S. companies’ IP.
Chinese state-supported company Fujian Jinhua received a $3 billion subsidy to build the world’s largest fabrication facility for dynamic random-access memory (DRAM) chips and got the technology to build the chips by stealing it from Micron, one of three major DRAM companies in the world, Atkinson said.
“Potentially, if the administration hadn’t pushed back against that, they would have ended up taking Micron’s market share away and eliminating and destroying many, many jobs in the U.S.,” Atkinson said. “And we see that over and over again.”
Atkinson also noted that the Chinese stole MIT startup American Superconductor’s technology for software controls for wind turbines.
On the technology transfer issue, Atkinson said there are some cases of voluntary tech transfer, but most technology transfers are essentially “a deal you can’t refuse,” as companies from countries including the U.S., Germany or Japan often are told they can’t even invest or sell in China if they don’t transfer technology to a Chinese company.
But Center for Economic and Policy Research senior economist Dean Baker said tech transfers are voluntary in that they don’t happen unless companies choose to “locate” in China.
He also said IP is “incredibly inefficient,” slowing growth, and that alternatives to IP should be considered rather than further entrenching it in the global economy.
“It increases inequality,” Baker said. “I’d have to think for a while about a policy that leads to more inequality than intellectual property.”
Thea Lee, president of the liberal-leaning Economic Policy Institute, pushed back against Baker’s perspectives on technology transfer and IP rights.
She said it’s important to U.S. workers that companies not be disadvantaged by a government that “is not playing by the rules,” including appropriating U.S. trade secrets — sometimes through cyber theft and corporate espionage — that are connected to U.S. jobs.
She said Boeing was required to move production to China as a condition of aircraft sales to the country, contrary to Baker’s point that technology transfers are voluntary.
“That is something that clearly had an impact on American workers,” Lee said. “Machinists lost a lot of jobs because of those requirements, and it wasn’t because China was a better place to produce the airplanes. It was because of these kinds of deals.”