Trade and the People’s Republic of China

The Wall Street Journal wrote in its Thursday edition that the US was “refusing” to resume trade negotiations with the PRC until the latter made a formal offer to us.  That’s a bit of a misnomer, though, since there’s nothing about which to negotiate until the PRC makes an offer.  Absent that, any discussion about trade would be just idle musings over an afternoon tea, a whiling away of some time between more important things.

A couple of other things jumped out at me in that article, too.

For Beijing, making a formal offer presents a number of risks, according to individuals briefed by the Chinese. First, it would reveal their negotiating position. Second, Beijing fears that Mr Trump could make any offer public in a tweet or statement as a way to lock in any concessions by China.

First, honest negotiating requires positions being known to both participants.  If the PRC wants to keep its position hidden, it could only be to keep moving its demands, keep adjusting its goals as we make offers more and more in its direction.

Second, if the PRC doesn’t want to commit to this or that concession—or to any other aspect of its negotiating position—it doesn’t matter whether any of that is public.  The nation wants to be able to walk away from any of its negotiating commitments at its convenience, and that makes the PRC untrustworthy.

As the WSJ noted,

There is history behind Beijing’s concerns. During negotiations over China’s entry to the World Trade Organization in 1999, President Clinton turned down an offer by China’s premier at the time, Zhu Rongji, that included deep concessions and a reorganization of the Chinese economy. The Clinton administration made Mr Zhu’s offer public, hoping to prevent the Chinese from backsliding. Instead, Mr Zhu was pilloried at home by hard-liners, and it took months of negotiations to finally convince China to accept a deal similar to the one it initially offered.

There are two lessons from this bit of history that we still need to learn.  The first is that the PRC’s intent of walking away from its commitments even as they’re made—that hardliner pillorying—is a long-standing policy of dishonesty.  The second lesson is that, in the realization, the PRC walked away from that “similar deal;” it has no concessions from the deal extant and no serious reorganization of its economy even tried.

The Trump administration is wise to waste no time on empty negotiations over a chimera.  It’s chancy enough to negotiate a hard proposal with them, but that’s still infinitely preferable to negotiating PRC fog.

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