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Were Trade Negotiations With China A Success For The U.S.?


What did the United States really get from its sudden escalation and even more sudden dropping of a trade war with China? The chief economist for Moody's described the latest agreement as face-saving and lose-lose. Of course, the Trump administration describes it all differently. And now, let's hear the view of Matt Goodman. He's an expert on Asian economics at the Center for Strategic and International Studies. He served in the Bush and Obama administrations, and he's in our studios. Thanks for coming by.

MATTHEW GOODMAN: Good morning. Thanks for having me.

INSKEEP: Is this a win for the United States?

GOODMAN: Well, not yet, I think, would be the most charitable way to put it. I think both sides decided that this was not the moment they wanted the relationship to blow up. But on the other hand, they weren't ready to sign a deal on the kinds of things that the Trump administration wanted, which was a significant reduction in this bilateral trade deficit. And the Chinese just weren't ready to go there yet.

INSKEEP: The Chinese did say they would like that in principle, right? They'd be happy to reduce the deficit the United States faces over time.

GOODMAN: They said they're willing to buy more agricultural products, more energy products. Those are things they were going to buy anyway, so the question is whether that would have been, you know, a real reduction or just, you know, a sort of face-saving way out.

INSKEEP: Wait a minute. So the Chinese made a concession by agreeing to do things they would have done regardless.

GOODMAN: Exactly. I think that the easiest thing for the Chinese to do is just buy more commodities. The hard things are the things about the structure of their economy and their plans to dominate some of the key industries of the future. And that's what I think a lot of people who are making comments like the Moody's economists are saying we didn't really tackle at all in this agreement.

INSKEEP: Oh, let's talk about this because we've reported on this on the program. They have this plan over the coming years to dominate, I think, there's about 10...

GOODMAN: Exactly.

INSKEEP: ...High-tech industries, ranging from electric vehicles to semiconductors, a lot of different things. And they're doing this with subsidized companies - right? - government-subsidized companies.

GOODMAN: Exactly. They're putting massive subsidies behind the national champions that are building things like electric vehicles and robotics and artificial intelligence. And then they're tilting the playing field against foreign competition, making it more difficult for foreign companies to compete in that market. And they are using a variety of techniques to take technology, whether through theft or through requirements that as a condition of market access a foreign company has to hand over their technology, and that's what's really, I think, riling a lot of American companies in particular.

INSKEEP: Well, let's talk about that technology transfer because the administration raised that. They said they wanted to fix that. Does this agreement such as it is do anything about that or even promise to do anything about that?

GOODMAN: Well, based on the statement that was issued on Saturday, no. There was some reference to protecting intellectual property and working on that but really no clear sign that there's any movement on that. And that's not surprising because China is not going to give that away easily. They want to get to a more advanced value-added part of their economy. They want to bring another 600 million people into the middle class. And these plans are fundamental to them, and they're not going to give them up just like that.

INSKEEP: Let's be frank. Is it possible to force China to give what it needs to give - what the United States needs it to give - without a trade war, without really putting the pressure on?

GOODMAN: I think pressure is needed. The pressure should be multilateral. We need the Europeans, the Japanese, the Australians, others who have similar problems in that market to join us. And therefore the things the Trump administration is doing that sort of push away the allies doesn't seem like a great idea - for example, the steel tariffs that were imposed on several of those countries that I mentioned. And so I think the key is to get everybody together working to push China on these things, and then it's possible.

INSKEEP: Matt Goodman of the Center for Strategic and International Studies, thanks very much.

GOODMAN: Thank you. Transcript provided by NPR, Copyright NPR.

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