For governments everywhere, Donald Trump’s presidency may be like no other. China’s leadership, used to the surety of one-party politics, will be especially uncertain about what Trump’s unconventional ways mean for the future. But Beijing can play its part to ensure that the U.S.-China relationship gets off to a sound start.
A wise first move would be to remain mindful of what the U.S. election result said. American voters, many of whom believe that free trade is not fair trade, elected a president who promised to return jobs to America and amend or abandon many of the trade agreements that America has signed or is negotiating. China’s leaders should anticipate that he will do so.
This doesn’t mean that Mr. Trump wants to imperil the U.S.-China commercial relationship. The benefits to each side are too important. But gains from trade can be diffuse, and many American voters question the premise that the U.S.-China commercial relationship has been good for the country—or for them. If he is to assuage his electors, Mr. Trump must show that the benefits of trade outweigh the perceived losses.
A second move would be for China to make real efforts to rectify inequities in the U.S.-China commercial relationship. It could begin by reducing market-access barriers for professional services; eliminating the multitude of bureaucratic hurdles for medical-device, pharmaceutical and agricultural products; accelerating financial-services liberalization; and revisiting laws designed to favor domestic-technology providers over foreign ones. China should also remove the biases built into its industrial policies, which are also designed to promote domestic companies over foreign counterparts.
Another gesture President Xi Jinping should make is a significant and persuasive offer on the U.S.-China Bilateral Investment Treaty, which Mr. Xi has cited as a high priority. If China tabled a drastically reduced negative list in the BIT, with fewer areas ruled out to U.S. investment, as well as reduced equity caps where they remain, it would be an easier sell to the American public and to the U.S. Congress.
This could also address growing calls for reciprocity in investment. The recent high-profile Chinese acquisitions of Dick Clark Productions and AMC Theaters belong to one of those areas, media and entertainment, that China keeps tightly closed to foreign investors.
China maintains ownership restrictions on American and foreign investors in nearly 100 industries. U.S. firms are highly competitive in many of these, ranging from automotive to cloud computing.
Foreign players have a miniscule share of China’s financial-services market. If one compares the OECD’s Regulatory Restrictions Index for the U.S. and China, only one conclusion is possible: China has a long way to go to match the openness of the U.S. economy.
A BIT could create a more level playing field. But to do so, it must open up China’s services sector. It should address China’s lack of regulatory transparency and due process. It should provide a narrow definition of national security so that China cannot use those objectives to undercut the intent of a BIT to encourage investment. And it should limit demands for intellectual property and data localization.
A solid BIT offer would be a credible opening salvo from the Chinese side to appeal to a president who likes a deal. Without meaningful improvements in these areas, Mr. Trump will have little to show the voters. And unless he gets something, Chinese investment opportunities in the U.S., until now relatively unrestricted, will tighten, and the two countries’ ties will weaken.
It is important that China and the U.S. get their bilateral relationship right. And the commercial and economic aspect of that relationship is paramount, underpinning many of the links between the two countries. Ensuring that the relationship continues to benefit both countries, however, will require that China pay more than lip service to American workers’ concerns.
Mr. Gibbs is chairman of the American Chamber of Commerce Shanghai.