Strength in Numbers

Collaborative Approaches to Addressing Concerns with China’s State-led Economic Model

Tensions in U.S.-China economic and trade relations have steadily increased over the past year, leading to the imposition of tariffs and counter-tariffs impacting nearly USD $400 billion in two-way trade. At the heart of the conflict are challenges posed by China’s state-led economic model, including excessive and under-reported industrial subsidies, operation of state-owned enterprises (SOEs), forced technology transfer, and state-driven strategic guidance as embodied in the “Made in China 2025” initiative.

While the U.S. has been at the forefront of calling out many of China’s problematic trade practices, these policies also impact many of China’s other trading partners, and the U.S. has not been alone in voicing its concerns. The Trump administration, however, has mostly relied on unilateral measures and bilateral negotiations to address them. While there have been some efforts recently to work with other countries, much more could be done to coordinate with like-minded countries to more effectively address the broader structural issues posed by state-led economic policies.

As the U.S. and China appear close to reaching a negotiated settlement, Asia Society Policy Institute (ASPI) Vice President Wendy Cutler makes the case in these newest ASPI issue paper — titled Strength in Numbers: Collaborative Approaches to Addressing Concerns with China’s State-led Economic Model — that now is the time for the U.S. to shift focus to working with allies and partners on these challenges. This paper offers concrete recommendations on ways to work with other countries, including through existing international organizations such as the WTO, the G20, the OECD, and APEC, by forming new “ad hoc” groups, and through coordinated “defensive” domestic actions. By striking the right balance between unilateral, bilateral, and international initiatives, the U.S. stands a better chance of achieving an enduring and comprehensive resolution to these concerns.

The recommendations included in this paper are based partly on two roundtables ASPI organized in Washington, D.C. with experts in October and December 2018, as well as discussions with current and former government officials, private industry, and think tank experts.

About the Author

Wendy Cutler joined the Asia Society Policy Institute (ASPI) as vice president in November 2015. She also serves as the managing director of the Washington D.C. Office. In these roles, she focuses on building ASPI’s presence in Washington — strengthening its outreach as a think/do tank — and on leading initiatives that address challenges related to trade, investment and innovation, as well as women’s empowerment in Asia. She joined ASPI following an illustrious career of nearly three decades as a diplomat and negotiator in the Office of the U.S. Trade Representative (USTR). Most recently she served as Acting Deputy U.S. Trade Representative, working on a range of U.S. trade negotiations and initiatives in the Asia-Pacific region. In that capacity she was responsible for the Trans-Pacific Partnership (TPP) agreement, including the bilateral negotiations with Japan. She also was the chief negotiator to the U.S.-Korea (KORUS) Free Trade Agreement. Cutler received her master’s degree from Georgetown University’s School of Foreign Service and her bachelor’s degree from the George Washington University.

Alcoa Foundation

The project was made possible by a grant from the Alcoa Foundation.