https://www.realclearpolitics.com/articles/2019/05/17/the_hard_politics_of_us-china_trade_talks_140352.html
Since neither side benefits from a trade war, why are both sides threatening one?The answer is straightforward. Although both sides could benefit from a deal, one side could benefit more — a lot more — depending on the final terms.Two key issues dominate the current stalemate. The first is how many of China’s mercantilist practices will be rolled back. These include tariffs on imports from America, required partnerships with Chinese firms, forced transfers of intellectual property, and sometimes outright theft of trade secrets. The second is whether the terms are precise, enforceable, and undertaken as formal commitments by China’s highest-level institutions.China’s problem is that its economy depends on these unfair practices, and communist leaders benefit from them, politically and financially. Some, like widespread theft of Western intellectual property, help lots of local companies. Others, like the coercion of foreign firms to accept local partners, help the party most because it picks the winners. As with any patronage system, the winners are politically connected firms that share the largess with their benefactors. (Economists call this “rent-extraction” politics.)Chinese political leaders are understandably reluctant to alter these sweet arrangements. They wouldn’t change them at all without significant outside pressure, which is exactly what the U.S. is exerting. Since Beijing has to make some kind of deal, it would prefer informal commitments, the vaguer the better. Later, China could edge away from them, hoping the U.S. would not retaliate.
