[ANALYSIS] G20 showdown? U.S. calls out China

The Philippines is not a member of the G20 – the grouping of the largest economies in the world – and so unlike the recent ASEAN and East Asia Summits here, as well as the APEC Summit in Papua New Guinea, Philippine President Rodrigo Duterte will not be in the room as leaders gather in   in the 13th meeting of the Group of 20 in Buenos Aires, Argentina, starting on Friday, November 30. 

It is the first G20 Summit to take place in South America. Yet, even there, far from the Indo-Pacific, the ramifications of ongoing US-China trade tensions playing out in East Asia and Southeast Asia will continue to be felt. Fireworks may well be in order with both US President Donald Trump and China President Xi Jinping in attendance in Argentina. That was certainly the case in PNG even without Trump in attendance.

For the first time ever in its nearly 30 years, the APEC Summit ended in disarray, without a final communiqué. The Wall Street Journal reported that China effectively torpedoed a communiqué over a single sentence: “We agreed to fight protectionism including all unfair trade practices.” China’s worries, no doubt, could well have been over concerns that its own trade practices are being recognized increasingly as unfair. 

Despite the United States’ having taken the lead in imposing tariffs on billions of Chinese good in response to what the Trump Administration sees as unfair trade practices, it was China and Xi Jinping that were on the defensive in PNG.

Opportunity for trade reset

A US-China tariff war is sure to continue to produce very real economic consequences, and political fallout, in both nations as well as across ASEAN. It, however, also presents an opportunity for a trade reset. 

The ongoing “tariffs war” provides a chance to reexamine the trade relationship between the world’s two largest economies and perhaps set a new course that would address some of the elephant-in-the-room issues of China’s trade practices.

As we have argued in the Los Angeles Times and in other media across the United States, whatever else one might think of President Trump’s actions, he is confronting China about its unfair trade practices and theft of American intellectual property when too many – including in the IndoPacific region – shy away from the truth for fear of Chinese reprisal.

It bears remembering that the Chinese trade practices that irk Trump truly do bedevil Americans and others doing business with China, and they go back decades, to at least to the mid-1980s, when China under Deng Xiaoping was opening to the world.

Once the US formally recognized the People’s Republic in 1978, American businesses were tantalized by the prospect of China’s untapped market of one billion consumers. What American companies soon discovered, though, was that this trade partner did not play by the accepted rules.

China’s repeated and unashamed theft of intellectual property has been especially egregious and damaging. A 2017 report by the independent and bipartisan US Commission on the Theft of American Intellectual Property put the annual cost of IP theft by all parties at $255-600 billion in counterfeit goods, pirated software and stolen trade secrets; these figures do not include the full cost of patent infringement. The commission named China “the world’s principle IP infringer.”

A now-emboldened China is pushing its “Made in China 2025” campaign, an ambitious plan not only to upgrade Chinese industry – most notably in advanced sectors like information technology, robotics and pharmaceuticals, where IP is key – but to compete with and ultimately displace foreign companies domestically and globally.

To that end, it has continued to aggressively push foreign companies to hand over technology and IP rights in exchange for market access, a possible violation of World Trade Organization (WTO) rules.

‘You had it coming’

China’s leaders no doubt see things very differently, and the Chinese expression “huo gai” might well apply. Loosely translated, it means “you had it coming.”

If you leave your door unlocked and get burgled, huo gai – it was your own fault because you didn’t lock up. Similarly, if US businesses do not take measures to protect their own IP, it’s huo gai. China waltzes in and makes off with it.

That’s something the Philippines too should keep in mind as it seeks to turn Xi’s promises of loans and other support for infrastructure projects in the Philippines into reality.

Trump’s approach, while unpalatable to some and unsettling in the short term, could result in a much-needed new chapter in US-China trade as well as in China’s trade with individual members of ASEAN and other Indo-Pacific nations, including the Philippines.

If nothing else, Trump has unequivocally called China out for behavior that should not be tolerated, and paved the way for other nations to do so too.

The APEC Summit may well have ended in disarray but it also sets the stage for progress and a more successful G20 summit in Argentina, with all of the world’s leading economies coming together to fight all unfair trade practices.

First though, China must look inward, and a face-saving deal be envisioned for and by all. If that happens, the Philippines too will benefit. – Rappler.com

 

Curtis S. Chin, a former U.S. ambassador to the Asian Development Bank, is managing director of advisory firm RiverPeak Group, LLC. Charlene L. Fu is a freelance editor, reporter and translator. She worked in Beijing from 1986 to 2008, much of that time as an Associated Press Correspondent. Follow Curtis on Twitter at: @CurtisSChin