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CNN TODAY
US-China Tariffs, Trade War
Robert Lawrence Kuhn, August 2, 2018
Host: To talk about the potential impact [of
tariffs]…. Robert Lawrence Kuhn is a long-time
advisor to China’s leaders and the Chinese
government. He is also the author of How
China’s Leaders Think. You are the perfect
person to have on to get China’s perspective.
Thank you so much for joining us.
RLK: A Pleasure.
Host: So Trump is obviously hoping for some
kind of trade deal, but is this going to work?
Tariffs to get Chinese officials to the table?
RLK: Certainly from China’s point of view, they
were very happy with the status quo before this
occurred. They blame the U.S. for starting a
trade war. They think the U.S. will suffer and,
indeed in a trade war, everybody suffers. There
are some serious problems, though, that
American experts, American government
[policies], reflect. Very few people in the U.S.
actually support the tariffs themselves. There
will be higher prices for consumers. There will
be more people affected – [there are] more
industries that use steel than produce steel.
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RLK: So there’s a significant impact [on the
US]. The US hope is that China will be
pressured to make changes in its policy. Now
the [tariff] policy is not just [targeting] the
trade deficit. The policies are, what are called,
China’s closed market, intellectual property
protection, industrial espionage, tech transfers
and JVs (to get the Chinese market) and
government support for tech. And for each of
these, China has responses. China says it was
doing what was appropriate under the WTO
because it was a developing country. Now that
it’s advanced, it’s opening markets.
China has a “negative list” telling people
[companies] what it cannot do, making it much
easier; China is also opening further in autos
and financial services. But they need to be
pushed more. Even economists in China
recognize that, that coming out of this, if we
have cool heads and smart brains, both sides
can be better off.
HOST: So are there other ways to do this? You
listed that Trump wants to close a trade deficit.
He’s hitting back at these closed markets. He
wants to prevent the stealing of intellectual
property. What is an effective way to do this
besides heaping these tariffs on China?
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RLK: Well some people would say that tariffs
have at least got China’s attention. Even some
leading people tell me privately in China that in
that sense China needs to move faster in doing
things like opening markets, like intellectual
property protection. Now they are doing some
things. They have an intellectual property
court. I visited it in Shanghai a few months
ago. It’s working really well. Much more
progress needs to be done. So in that sense the
tariffs are a beacon that tells everybody we
need to deal because everybody is going to
suffer by tariffs. The question is how we deal
with it.
China needs to make some specific changes
regarding markets, IPR, some of these other
things — they should be done subtlety and not
publicly. That’s the way to get things done.
HOST: I see. You know, President Trump has
infamously said that trade wars are good and
they’re easy to win. And you wrote about this,
why the Chinese don’t think that the U.S. could
ever win a trade war with Beijing. It was a
very long list but tell us the highlights of that.
RLK: Right — in the early days of the so-called
trade war, the Chinese media and Chinese
experts were talking very frequently about how
the U.S. can’t win.
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Examples were the U.S. is divided on tariffs
which is certainly true. China is not because
publicly people don’t speak against the Chinese
government, so that may be a little bit
artificial, but nonetheless it is a matter of public
policy in China to support the government.
There’s a nationalistic pride in China.
Americans will be affected by their pocket
book. They’re going to pay more for baseball
gloves and television sets and dishwashers.
And people are not going to be happy about
that. There will be industries that will be
affected — and technology and soybeans we
know. So there will be many, many interest
groups in the U.S. that will argue and fight
against tariffs.
So the basic reason is that the U.S. has a
divided approach to tariffs, and that’s certainly
true. Most experts deny that tariffs are an
effective way. Quiet diplomacy, putting
pressure on China in the right way is the way
because China does need to make some
changes. People in China recognize that.
HOST: As China is saying they will not be
blackmailed to doing these things. We’re going
to have to leave it there. Robert Lawrence
Kuhn, we appreciate your expertise. Thank you
very much for your time.
RLK: Thank you.
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