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Trade war improves China's economic practices

China sometimes engages in unfair economic practices; the trade war will change that.

Proponents

Context

The rise of the Chinese economy has fuelled fears of unfair competitive practices that threaten businesses abroad; this is the premise of President Trump’s rhetoric behind the trade war. The US, by punishing these practices, hopes to force China to abandon them.

The Argument

China engages in unfair economic practices. These practices sit on a spectrum; it’s helpful to disambiguate between three types [1]: 1. Actions which are generally considered illegal; these include the outright theft of intellectual property, as with Chinese military officers hacking into American firms in 2014 [1]. 2. Actions which are considered unfair, if not strictly illegal, such as demanding that foreign firms gift technology in exchange for market access, or artificially devaluing its currency historically [1]. 3. Actions which represent intense forms of (legal) competition. The US hopes to dissuade China from engaging in unfair practices. Waging the trade war against China will squeeze Chinese firms, hurting their profit line. In turn, this has political ramifications for the Chinese government. Consequently, China will be deterred from engaging in unfair practices in future, stepping in line with established international norms of commerce. Fair competition from China is better for the world. It allows overseas businesses access to Chinese markets on better terms, and prevents them from being unfairly out-competed on the global stage. [1] The Economist, “How China is battling ever more intensely in world markets”, 23 September 2017

Counter arguments

This argument makes two key assumptions. The first assumption is that Chinese firms will be significantly hurt by the trade war. This argument is logically contingent on the question of the outcome of the trade war – a question evaluated elsewhere in this issue. Suppose for the sake of argument that Chinese firms will be significantly hurt by the trade war, forcing a conciliatory stance with the US. Even if that is true, it doesn’t follow that China will improve its economic practices more broadly. At best, China might negotiate a deal with the US to treat US firms fairly. Other nations lack the leverage to conduct the same punitive trade war with China.

Premises

1. The trade war with China will hurt the Chinese economy 2. If the trade war with China hurts the Chinese economy, China will roll back its unfair economic practices 3. China rolling back its unfair economic practices is good for the world

Rejecting the premises

Response to [1]: The damage to the Chinese economy may not be sufficient; this depends on the outcome of the trade war. Response to [2]: China may respond to the trade war by rolling back unfair economic practices against the US, but not more generally.

References

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This page was last edited on Tuesday, 21 Aug 2018 at 19:22 UTC