I want to see if I have this straight. The U.S. and China are trying to negotiate a trade deal. Hopefully, such a pact would benefit both countries. We are, after all, each other’s largest trading partner, with maybe a trillion dollars or so in commerce flowing back and forth across the Pacific every year.

That footwear you wear for a jog, a walk, or simply to make your toes feel comfortable, could well originate in China. Even the clothes you wear to do such athletic activities also come from that mainland. And a bunch of the equipment or toys you like to play with while wearing the shoes and sportswear are made in that country.

Fireworks, Christmas lights, telescoping umbrellas, seamless plastic disposable gloves, LED lights, and even cordless drills reportedly come almost exclusively from China. Computers and other electronics are right up there on the list too. In return, we send them soybeans. Well, a few other things too, such as transportation equipment, but food is a big part of the equation.

The trading gap between the two superpowers in the world is northward of $375 billion. And the U.S. is on the short end of the equation. Which is why President Trump continues to propose import fees. He’s a businessman. He likes his ink to be black at the bottom of the ledger, not red.

You’d think a level playing field would be a sought-after goal. They need what we have, we need what they have. But it certainly seems from the point of view of one who took a Pass/Fail course in Introduction to Economics his junior year of college (I got a “P” by the way – but it wasn’t a high “P”) that China wants to hold all the cards.

For example, China reportedly requires foreign companies to enter into joint ventures with their local firms. That usually involves transferring over to the locals proprietary technology. Surprise, surprise, those who developed the know-how are loathe to just hand it over without compensation or at least some kind of quid pro quo. China claims they don’t force anybody to do anything, but I’m guessing it’s strongly suggested you hand over the secrets if you ever care to sell your goods to the 1 billion potential Chinese buyers.

If I read things right (see Pass/Fail above), the Chinese government also tends to own outright or to at least have a stake in many enterprises within its borders. Those are pretty deep pockets that can pretty much be counted on to fund just about any venture. Especially when some of the world’s biggest banks are included in the state’s portfolio. It’s kind of like the U.S. government being heavily involved in the healthcare industry. Imagine what would happen if Washington were allowed to run amok in that sector of the economy. (Oh, wait a minute. Never mind. Forget I mentioned it.)

The point is, if the public treasury is available, you don’t have to worry about shareholders or Boards of Directors breathing down your neck when you run a company funded by Beijing.

The government also has a big hand in deciding what the end goals of most, if not all, of its industries will be. The term “American Genius” gets tossed around as taking a backseat to China because China can and does funnel subsidies to some pretty important industries such as aircraft, new energy vehicles, and biotechnology. U.S. companies most probably have to come up with the cash on their own to invent and innovate.

Recent reports say China has barred foreign companies from owning or operating their own data centers within the country. What happens in China stays in China. And it has a strict policy about what information is allowed on the Internet, and what can and cannot be sent abroad. (I’m pretty sure cat videos are allowed, but I’m not 100% certain.)

China’s position brings to mind an old Bill Cosby comedy bit (this is from a long time ago, when what he said and did was funny) about the “rules” of engagement for the Revolutionary War. Basically, the Colonialists could wear anything they wanted to, hide behind trees and rocks, and shoot whenever and whatever they wanted. The Redcoats, on the other hand, had to wear red and march in a straight line.

Doesn’t it seem as if China really wants to not only have all the cake, but all the ice cream to eat as well? Even a Pass/Fail Intro to Econ scholar knows that isn’t fair.

 

©MMXVIII. William J. Lewis, III  –  Freelance Writer