What’s Missing From the U.S.-China Trade Deal
The only way to truly change Chinese commercial behavior is to open up the country to full and unhindered foreign competition.
Allowing companies like Tesla to fully own their China operations isn’t enough.
Photographer: Qilai Shen/BloombergWith talks to end the U.S.-China trade war reportedly nearing a conclusion, it remains unclear whether any deal will fundamentally alter Chinese commercial behavior. The only way to do so is to introduce full, unhindered foreign competition into the Chinese market.
American negotiators seem to be trying to open up China by eking out incremental pledges on market access and reduced state subsidies. This isn’t likely to accomplish much. Leaders in Beijing have already promised to lift equity caps in most sectors for foreign companies. While helpful, the changes leave Beijing with plenty of tools to boost favored industries at the expense of foreign rivals. The same would hold true even if China does scale back its most egregious state-directed subsidies.