Yukon Huang and David Stack, in their National Interest piece, worry about a trade war with the People’s Republic of China—it would be borne of American protectionism, don’t you know.
The United States can learn an important lesson from China’s past experience: the key to strengthening competitiveness lies not in protectionist measures but by increasing the productivity of a nation’s workforce through supportive infrastructure investments.
Plainly, they have no understanding of protectionism, of which damaging tariffs are only one aspect, and none of the type or protectionism practiced by the People’s Republic of China.
The PRC’s protectionism begins with its demand that foreign companies seeking to do business inside the PRC take on a domestic partner that will have a significant, if not majority, ownership of the joint enterprise as it operates inside the PRC. The PRC’s protectionism continues with the government’s demand that, as part of that joint ownership, the foreign company transfer much of its proprietary technology to that partner—as a condition of forming the partnership. The PRC’s protectionism goes further: the PRC government demands a backdoor into the foreign company’s software so that the government can “monitor” the foreign company for “compliance.”
Rather than focusing on trade frictions, America’s interests should be on strengthening investment relations by concluding a bilateral investment treaty (BIT). The United States can learn an important lesson from China’s past experience: the key to strengthening competitiveness lies not in protectionist measures but by increasing the productivity of a nation’s workforce through supportive infrastructure investments.
Perhaps a BIT could be useful, however, the bit about increasing productivity is a complete non sequitur. Increasing our labor force’s productivity would be a general good in its own right; that has nothing to do with optimal trade relations.
Beyond that, the only way a BIT—or any multilateral trade agreement involving the PRC—would be beneficial to us (or to the PRC’s citizenry, come to that) would be if, just as a start, those PRC protectionisms were corrected.