Sean Stein’s Recommendations for China’s Economic Policy under Trump 2.0
Sean Stein’s Recommendations for China’s Economic Policy under Trump 2.0
Sean Stein replaced former ambassador Craig Allen as president of the US-China Business Council at the beginning of this year. Given the importance of this new position, the U.S.-China Perception Monitor was interested to know what recommendations Stein might have for Beijing’s economic policies under the second Trump administration.
In general, Stein advocates for fair and open business practices, an end to secret trade and subsidy policies, and balancing the economy to create a social safety net and boost consumer spending.
The US-China Business Council is an important partner of The Carter Center’s China Focus initiative, which publishes the U.S.-China Perception Monitor. Most recently, the US-China Business Council helped sponsor the inaugural Jimmy Carter Forum on US-China Relations.
The US and global economies thrive when the world’s most innovative countries trade with each other, but the trading environment needs to be fair and market-based. As we look into the year ahead, there are many steps China could take that could ease economic tensions with the United States and other trading partners as well as boost its own economy. For example, China could do more to:
- Ensure a level playing field for American companies: USCBC member companies continue to face longstanding regulatory and industry-specific market access barriers in China. The Chinese government should address unfair economic practices, including ending discriminatory industrial policies and subsidies, suspending secret (neibu) policies that promote domestic substitution and contravene publicly announced policies, opening government and SOE procurement more fully to foreign companies, ensuring administrative and regulatory investigations and the issuance of licenses and approvals not discriminate against non-Chinese firms, and strengthening protection of intellectual property.
- Increase imports of US goods and services and follow through on past commitments: Expanding trade was a key pillar of the US-China Phase One Agreement. Under the agreement, China committed to increase imports of US manufactured goods, agricultural products, energy, and services through 2025. While US exports to China have grown annually since the agreement was signed, China has still fallen well short of its purchase commitments. In addition, China has not fully implemented other key trade commitments, including some made during its negotiations to join the WTO.
- Increase domestic consumption and rebalance the economy: China produces more than it consumes, which results in part from its fiscal system directing high levels of investment and subsidies to the manufacturing sector while underfunding the social safety net. In many cases, excess supply is exported to overseas markets at submarket rates, undercutting other producers and sparking tensions with trade partners. To increase domestic consumption, Chinese authorities should enact the structural reforms and other recommendations detailed in its most recent IMF Article IV consultation report. Those recommendations include strengthening social safety net programs (pension insurance, unemployment insurance, and medical insurance), scaling back industrial policies and subsidies, and improving financial policies to address non-performing loans. These reforms would not only help address trade imbalances with the United States and other trading partners, but it would help boost China’s own economy.
As we prepare for President Trump to return to the White House for a second term, we hope the two sides can engage constructively and productively and resolve long-standing challenges in the trade relationship in ways that benefit the United States, Chinese, and world economies.
