“The assumption was that as China grew, and the W.T.O. moved to a new regime, China would quickly cut its tariffs — like its 25 percent tax on car imports, compared with the 2.5 percent tariff imposed by the U.S. But the W.T.O. still has not completed a new trade round and China has refused to voluntarily lower its tariffs.
Moreover, China developed an industrial policy that often bent W.T.O. rules. The government gave away cheap land, and state-guided banks granted cheap loans for new industries, but foreign companies that wanted access to China’s market were forced to pay to play — to have a Chinese partner and be willing to transfer their advanced technology to them.
As a result, over time, Beijing was able to force multinationals to shift more and more of their supply chains to China, and grow Chinese competitors to Western companies in its protected market, and then, once they were big enough, unleash them on the world as giants.
Even when the U.S. protested to the W.T.O. — as in the case of how China unfairly kept U.S. credit card companies out, then lost the arbitration case at the W.T.O. — China still dragged its feet before following through on promises made 17 years earlier to open up. By then, Chinese companies, like UnionPay, so dominated China’s credit card market that U.S. companies, like Visa, were left with the crumbs.
Meanwhile, Chinese government-guided companies and investment funds went abroad and began to buy up strategic industries to bring their technology back to China — like Germany’s biggest and best robotics company, Kuka.”
Thank you Thomas Friedman. Yes. And here are some of the top comments at the NYT I recommended.