The Group of 20 summit meeting in Osaka, Japan, next week provides an excellent opportunity for President Donald Trump to sit down with Chinese leader Xi Jinping in an effort to resolve their ongoing trade dispute. He could use some allied support.
America’s major trading allies have a lot to gain by backing the Trump administration’s efforts to wring reforms from China on its predatory trading practices. They should resist Chinese efforts to woo them with tariff reductions. Instead, they must insist on an end to the unfair Chinese practices of subsidizing exports and compelling companies doing business in China to transfer their technology to Chinese competitors.
The trade dispute reached a high point recently when Mr. Trump, after imposing tariffs last year of 25 percent on $50 billion of Chinese goods and 10 percent on another $200 billion, increased tariffs to 25 percent on the second $200 billion and threatened to extend the tariffs to an additional $300 billion of imports.
Mr. Trump said the escalation was necessary because Mr. Xi reneged on promised reforms to Chinese law that would reduce government subsides and end the forced transfer of technology, among other measures. He also seeks concrete commitments from China to increase U.S. imports by large, specific amounts.
Instead of trying to negotiate, China reacted by slapping tariffs on a range of U.S. imports. The U.S. sells far less to China than we buy from China, but China’s tariffs have been particularly painful for American farmers and automobile manufacturers, including Volvo.
China also has pursued other trading partners with offers of concessions that could improve bilateral trade. One study says Germany, France and Britain, which once could be solidly counted on to back the United States, could benefit from these concessions to increase their trade with China by tens of billions of dollars per year.
But the United States is not the only country that has suffered from China’s one-sided trade policies. The Financial Times reports that a recent meeting of trade ministers in Japan to prepare for the G-20 meeting turned up a number of complaints about Chinese industrial subsidies and steel dumping. And the European Union has complained about forced technology transfers.
If the world trading community wants an end to these coercive trade tactics — and it clearly does — it must back Mr. Trump in his demand that China change its laws that promote them.
The Osaka meeting June 28-29 is not likely to resolve this issue. Both sides may back away from escalating tariffs and show some goodwill toward resuming talks on the more fundamental dispute, but China is unlikely to undertake the necessary legislative reforms unless it faces a unified position from its major trading partners.
Mr. Trump has succeeded in getting China to talk about major trade reforms in part because his tariffs are beginning to prompt major investors in China, such as Apple, to openly discuss the possibility of moving their manufacturing operations elsewhere, and in part because China’s economic growth has slowed significantly.
But China has grown rich through exporting goods and co-opting, sometimes stealing, foreign technology. Convincing China of the inevitable need for fundamental change will likely take more than pressure from Mr. Trump.
President Trump should reach out to the European Union, Japan, South Korea and other major partners in world trade to create a common set of demands for trade rule reform. It is in their interest to join him in this quest.