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The first concrete demand should be a dramatic reduction in cybertheft. Xi once promised President Barack Obama that China would stop stealing U.S. industrial secrets in cyber smash-and-grab jobs, but the National Counterintelligence and Security Center reported recently that China “continues to use cyber espionage to support its strategic development goals.” Trump should insist that this must stop.
Second, China must stop forcing transfer of U.S. technology. Many U.S. companies are compelled to establish joint ventures with Chinese-owned companies, which are designed so that China can gain technological know-how. A senior Chinese official recently admitted as much, stating: “China’s offer to the world has been straightforward: Foreign companies are allowed to access China’s markets, but they need to contribute something in return: their technology.” But that’s precisely wrong. Under the deal China signed with the WTO, foreign companies get access to Chinese markets in exchange for China’s firms enjoying access to other nations’ markets — not their technology. Trump should insist that China immediately abandon forced joint-venture and technology-transfer requirements.
Third, China needs to slash subsidies. As researchers have documented, China has long propped up its own industries with government allowances to a far greater extent than most industrialized nations, including hundreds of billions of dollars from its Made in China 2025 plan. That needs to end.
Finally, China limits access to its markets in a wide array of sectors, including financial services, telecommunications, cloud computing and other information-technology industries, and entertainment. These and other markets need to be opened up expeditiously.
This isn’t an exhaustive list of all the trade issues that need to be resolved, but these are the most important, and must be part of any final negotiated settlement to lift U.S.-imposed tariffs. Moreover, because progress is measurable in all four areas, they should be evaluated every six months to see whether China is living up to its end of the bargain. If it is, then the Trump administration can rescind the tariffs. If not, the White House should make clear it will continue to apply pressure.