News Release

U.S.-China Trade Relations: Cooperation or Confrontation?

DAVID KOTZ, dmkotz at comcast.net
With escalating activity and rhetoric on trade between the U.S. and China, Kotz just returned from two weeks in Beijing and Shanghai. He is professor emeritus of economics and Sheridan Scholar at the University of Massachusetts Amherst. His most recent book is The Rise and Fall of Neoliberal Capitalism from Harvard University Press.

Kotz said today: “Many analysts and interest groups have criticized President Donald Trump’s trade war threats against China. Much of the criticism has been aimed at the administration’s tactics, not the goal of forcing a radical change in China’s trade and technology upgrade policies. That goal appears to be widely shared by elite policy analysts and business interests.

“The widespread criticism of China’s economic policy focuses on its industrial policy, through which the state encourages technological upgrade by investment in science and technology and by directing financing to key industries of the future. It is claimed that this leads to unfair state promotion of its industries as well as the theft of American technology. Overall, the policy is cast as an effort to ‘dominate’ all of the key industries of the coming years, an aim that is supposed to be openly proclaimed in the official policy document ‘Made in China 2025.’

“A reading of the ‘Made in China 2025’ document finds no mention of a goal of domination of key industries. Instead, it is a plan to reach the world technological and product quality frontier while addressing the problems of environmental degradation and global climate change. The U.S. claim of theft of technologies seems to be based on China’s practice of granting Western corporations access to its lucrative market on the condition of partnering with a Chinese company that leads to sharing of the technology and business practices with the Chinese partner, a deal that Western companies accept if reluctantly.

“The current establishment goal of changing China’s economic strategy appears to be a demand that China stop aiming for the global technological frontier but instead permanently accept a lesser position in the global economy. No rising country government could accept such a demand. This approach to U.S.-China relations will only lead to a dangerous and unresolvable conflict.

“While China’s rise has cost good jobs in the U.S., the way to protect American workers is not the imposition of punitive tariffs as a bargaining chip to get China to give up its ambitious plans for upgrading its economy. A government jobs program guaranteeing a living wage job for any worker who needs one, as part of a green economy development strategy, would insulate American workers from the negative effects of the rise of China’s and other developing economies. Instead of demanding that China give up industrial policy, the U.S. should adopt one of its own.”

See Kotz’s interview with The Real News shortly after Chinese President Xi Jinping commemorated Karl Marx’s 200th Birthday earlier this month.