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On Trade, the U.S. and China Consider the Unthinkable: Breaking Up

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BEIJING — The economic relationship between China and the United States has defined the modern era. It helped lift hundreds of millions of people in China out of poverty. It gave affordable iPhones and other gadgets to American consumers, handed big profits to American companies and delivered 1.3 billion hungry customers to American farmers.

Now some people in both countries want to tear it apart.

As a top Chinese economic policymaker meets with the Trump administration this week in hopes of heading off a potential trade war, some officials in both countries are planning for a time when the world’s two biggest economies do not need each other quite so much any more. They are seeking nothing less than a fundamental rethinking of a trade relationship that encompasses more than $700 billion in goods and services that flow between the countries every year.

Full disengagement is impossible, leaders on both sides acknowledge. But the plans being developed in Beijing and Washington anticipate a time when the economic engines of China and the United States are not so closely linked, particularly in high-tech industries.

“In the next step of tackling technology, we must cast aside illusions and rely on ourselves,” President Xi Jinping of China said last month after visiting a new computer microchip factory in the country’s center.

Beijing has Made in China 2025, a plan that calls for the country to become largely self-sufficient and globally competitive in 10 advanced manufacturing sectors now dominated by the West. These include commercial aircraft, robotics, 5G mobile phone communications and computer microchips.

China currently depends on the United States and its allies for those elements of a high-tech future. Washington showed that last month with its move to deny American-made components to ZTE, bringing the Chinese company’s factories to a halt.

But Washington is also worried about China’s efforts to build homegrown champions. The Trump administration blocked the chip maker Broadcom’s proposed acquisition of Qualcomm, a rival, this year, over concerns that the would give China’s Huawei an advantage in 5G technology.

The United States has outlined its own strategy of sorts to wean itself from China. Should the Trump administration enact its threated tariffs on $150 billion in Chinese-made goods, the thinking goes, American corporations would begin to reduce their reliance on Chinese-made small components, machinery and other dull-but-essential parts in the global supply chain.

President Trump’s proposed tariffs are partly targeted at industries where customers would have an easier


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https://www.nytimes.com/2018/05/16/business/china-us-trade-disengage.html?partner=rss&emc=rss

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