In 2001, China entered the global trading system when the United States pushed for its inclusion in the World Trade Organization (WTO). The push was meant to achieve several things. First, it was meant to help the US companies access an economy with more than 1 billion people. Second, it was aimed at helping bring China into the world trading system where it was expected to play by the rules. Third, it was aimed at helping the country improve its democracy and human rights profile.
Less than 20 years after the country was brought to the system, China has become a threat to the system. This is because for decades, the country has not played by the rules.
Here are a few ways the country has not done this. First, its companies are mostly owned by the state, which in turn gives them massive support. For example, the country’s steel and aluminium industry has continued to flood the world market with the products. This has led the price of steel and aluminium to fall, while its producers remain mostly unprofitable.
Secondly, the country has continued to employ child laborers which is against what the world stands for. By employing children, the country’s companies undercut companies from around the world who play by the rules.
Third, the country forces international companies to share trade secrets. This is an important fact that has led to serious conflicts. For example, a few years ago, Google tried to establish in the country. It did this to tap on the biggest market. To do this, it entered into a deal with a local company. Years later, the company it did business with stole the code and established a rival company known as Baidu. Baidu is now the biggest search company in the country and Google has been forced to exit the country.
Another example is Uber. Uber moved into the country hoping to benefit from its growing middle class. Years later, another company, Didi stole Uber’s code and forced Uber out of the country. The examples of these forced transfers are very many.
Fourth, the country has been accustomed to steal the innovation and brands of other companies. For example, Western companies like Gucci, Coach, and Versace spend billions of dollars in research and development. Chinese companies on the other hand spend nothing. Yet, the Chinese companies produce replica goods and market them around the world.
Last but not least, China has not opened its market to other countries. For example, Chinese companies can sell their products in all countries with little tariffs. Exporting to China on the other hand is very difficult because companies are faced with huge tariffs.
These are the main reasons why the Trump administration has singled out China on trade issues. Other administrations ignored the aggression by China which resulted into the massive growth by the country. The growing Chinese influence has led to increased aggression around the world, which poses risks to Western companies.