The most important problem that a bilateral deal between the United States and China needs to resolve is Chinese theft of US firms’ technology. Unless the Chinese agree to stop stealing technology, and the two sides devise a way to enforce that agreement, the US will not have achieved anything useful from Trump's tariffs.
CAMBRIDGE – It’s beginning to look like US President Donald Trump will yield to the Chinese in America’s trade conflict with China. The United States threatened to increase tariffs on imports from China from 10% to 25% on March 2 if no agreement was reached. But Trump recently said that the date is flexible and may be postponed because of the progress being made in the ongoing bilateral talks.
Fair enough, but progress is in the eyes of the beholder. The most important problem that needs to be resolved is not America’s massive bilateral trade deficit with China. It is that the Chinese are stealing US firms’ technology and using it to help Chinese companies compete with those same firms in China and around the world.
The Chinese do this in two ways. First, US firms that want to do business in China are required to have a Chinese partner and to share their technology with that firm. That compulsory sharing of technology is explicitly forbidden by World Trade Organization rules. Since joining the WTO in 2001, the Chinese have ignored this rule and disingenuously claim that US firms voluntarily agree to share their technology because they want to be active in China.
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