For a Philosophical China-U.S. Coexistence

　　THE phase-one trade deal signed betweenChina and the United Stateswill ease trade tensions as wellas take the bilateral trade negotiationsforward.

　　That the deal, despite its positive overtones,has invited some criticisms both inthe U.S. and China, shows that it, althoughhaving a certain balance, cannot satisfyeveryone. The two sides have reached anecessary compromise.

　　Concerns center mainly on the prospectsof a phase-two deal and smoothprogress of the trade talks. In fact, thedecisive factor is not the negotiating skillsor having bargaining chips but how Chinaand the U.S. respond to the significantdifferences between their economic andpolitical systems and ideologies, which aremore complicated than those between theU.S. and the Soviet Union.

　　Since the global financial crisis, Westernanalysts have used multiple labels todescribe China’s political and economicsystems. They have even said China’s“state capitalism” poses a challenge to the“Washington Consensus.”

　　After 2017, the West’s characterizationof China’s political and economic systemsturned even more negative. For example,Peter Navarro, trade adviser to the U.S.

　　president, accused China of intellectualproperty theft, often using the rhetoricthat China is “basically trying to stealthe future of Japan, the U.S., and Europe.”But the fact is that since China joined theWorld Trade Organization, its annual IPRlicensing fees have exceeded the globalaverage.

　　In 2000, it paid US $1.3 billion in IPRlicensing fees, which increased to US $35.6billion by 2018, an average annual growthrate of 20 percent compared with the averageglobal growth rate of 9.5 percent.

　　In addition to this, on the issue of industrial subsidies, the U.S. has resorted toa double standard. In the U.S., subsidies forindustries such as advanced manufacturingand agriculture are huge. Amazon, forexample, received at least US $613 millionin local government subsidies between 2005and 2014. And from 2010 to 2016, the U.S.administration invested more than US $100billion in basic research in biomedicine.

　　Ironically, while the U.S. is asking theChinese government to reduce its “intervention”in industry, it is learning fromChina how to use the government topromote innovation, and develope artificialintelligence (AI) by adopting a holisticgovernment approach.

　　In May 2018, the U.S. administrationhosted the Artificial Intelligence forAmerican Industry Summit, emphasizinggovernment coordination in combiningthe strengths of industry and academia tomaintain U.S. leadership in AI. In February2019, the U.S. announced the AmericanArtificial Intelligence Initiative, which isactually an executive order that requiresthe federal government to increase investmentin the AI industry.

　　The White House has also formed theSelect Committee on Artificial Intelligence,which is comprised of officials fromgovernment agencies including the Officeof Science and Technology Policy, NationalScience Foundation, and the Defense AdvancedResearch Projects Agency. And thePentagon has established the Joint ArtificialIntelligence Center to strengthen thepartnership between the U.S. military andSilicon Valley tech giants.

　　Of course, China has been taking measuresto strike the right balance betweenthe roles of the government and themarket in the economy. Stephen Roach, asenior researcher at Yale University, saidthat although China’s difficult economictransition is continuing, its reforms haveachieved a lot in the past few years. Peopleshould pay attention to “next” China, hesaid, as the U.S. administration’s obsessionwith antiquated perceptions of China isn’thelping to solve the problem.

　　If the U.S. expects the Sino-U.S. tradetalks to yield unrealistic results in its favor,it will only be disappointed. And if theU.S. continues to be hostile to the Chinesesystems, the pace of China’s reform andopening-up may slow, increasing the pressureon reform officials. In fact, the tradewar triggered by the U.S. has greatly hurtthe interests of Chinese enterprises such asHuawei, which could prompt them to askthe government to set up trade barriers toprotect national economic interests. Thiswill not be good for any country.

　　Whether it likes it or not, Washingtonhas to accept the fact that China will notfollow the U.S. economic developmentmodel. The U.S. can no longer force Chinato accept its demands now that it is theworld’s second largest economy.

　　That China and the U.S. have reacheda phase-one deal shows they are trying tofind a way to ensure their economic systemsco-exist peacefully, which is crucialfor the continuation of the Sino-U.S. tradetalks.

　　Of course, competition between the twosides is inevitable, but it should be basedon rules that are acceptable to both, andshould not cause losses to other economies.

　　In short, it’s wrong to look at theChinese and U.S. systems as an irreconcilablebarrier and unwise to judge China’sdevelopment model from a static perspective.There is a route beyond the binaryof “deep integration” or “decoupling.” AsChina’s Ambassador to the United StatesCui Tiankai said, the resilience of Sino-U.

　　S. relations lies in their ability to solveproblems and overcome difficulties.

　　ZHAO MINGHAO is research fellow at CharharInstitute.