Because of this blog, our China lawyers get a fairly steady stream of China law questions from readers, mostly via emails but occasionally via blog comments or phone calls as well. If we were to conduct research on all the questions we get asked and then comprehensively answer them, we would become overwhelmed. So we usually provide a quick general answer and, when it is easy to do so, a link or two to a blog post that provides some additional guidance. We figure we might as well post some of these on here as well, which we generally do on Fridays, like today.
Let me begin this post by saying that I am a perpetual optimist. Ask people who know me well and I’m sure they will back me up. I’m not just the kind of person who views a glass half full, I will immediately tell you why this half-fullness is such a great thing and how all we need to do to get the glass entirely full is to do XY and Z. My optimism is so “bad” that I have to fight against it. If someone has cancer, my first instinct is that “we’ll fight it and win and so I’m not even going to worry about it.” I’m tempted to say something like that but I’ve learned that nobody wants a lawyer (and not a doctor) saying something like that, so I don’t. But I have once or twice when been told that someone with cancer is “pretty much out of the woods” said, that’s great but I knew that would happen. That gets me weird looks. Not claiming to be scientific here, but that is how I’ve always thought about life.
I mention all this to explain my pessimism about United States-China relations. Optimism and hope are great but as a lawyer tasked with representing companies that put livelihoods and financial returns on the line, I am not retained and paid to give advice intended to make people feel better or to condone proposals I do not believe will work. I am retained to give the facts and the laws and my opinions based on an objective analysis of those facts and laws. I am not retained to make people feel better or to condone actions I do not believe will work. I am retained to find solutions or when there are no solutions to be clear about that as well. Believe it or not, we would much prefer to get fired for telling the truth about a client proposal we know will not work than to just go along with it and hurt our reputation and our integrity by encouraging a sure failure. The great majority of lawyers I know act likewise.
This is all my preface to today’s question. Our China lawyers and our international trade lawyers are constantly getting asked, “what next for US-China trade?”
My response is that I see the United States and China continuing to decouple. I see this because both the United States and Chinese governments want this for the long term and everything you see that looks like things are otherwise are just short term solutions to forestall possible economic problems. So for instance, when someone says, “how can you say greater decoupling is inevitable when the United States and China are right now on the verge of reaching agreement on at least some of the disputed issues?”
I can say this because whatever “baby” agreement is reached will focus on the pure trade or economic issues. They will not resolve the deeper issues, such as China’s intellectual property theft, China’s closed market for foreign companies, and China’s subsidies for its own companies. Most importantly, they will not resolve the United States’ issues with China’s handling of Hong Kong, Xinjang, Tibet, Taiwan and the South China Sea. To see where things are going with US-China relations stop focusing on the little issues like the amount of agricultural products China will buy from the United States in the next year (especially since China is in desperate need of ag products because its own farm system is such a disaster). If you want to discern the future of US-China relations you should be reading or listening to the big picture long term pronouncements by government leaders. Reading the following will help:
- Does China WANT a Second Decoupling? The Chinese Texts Say That it Does
- 2019 Herman Kahn Award Remarks: US Secretary of State Mike Pompeo on the China Challenge. Full transcript of an October 30, 2019 speech by Secretary of State Pompeo.
- Remarks by Vice President Pence at the Frederic V. Malek Memorial Lecture. Full transcript of an October 24, 2019 speech by Vice President Pence.
- The US-China Economic and Security Review Commission 2019 Report to Congress, which came out just yesterday. It summarizes the US-China trade relationship as follows.