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How to Get Past the US-China Trade War

China and the United States, like all other countries, should be able to maintain their own economic model. But international trade rules should prohibit national governments from adopting “beggar-thy-neighbor” policies that provide domestic benefits only by imposing costs on trade partners.

CAMBRIDGE – China’s economic rise poses significant political and strategic challenges to the existing global order. The emergence of a new superpower in Asia has inevitably produced geopolitical tensions that some have warned may eventually result in military conflict. Even absent war, the hardening of China’s political regime, amid credible allegations of myriad human-rights abuses, raises difficult questions for the West.

Then there is the economics. China has become the world’s top trader, and its increasingly sophisticated manufacturing exports dominate global markets. While China’s international economic role is unlikely to be insulated from political conflict, it is also inconceivable that the West will stop trading with China.

But what kind of rules should apply to trade between countries with such different economic and political systems? I recently teamed up with Jeffrey Lehman, Vice Chancellor of New York University’s Shanghai campus, and Yao Yang, Dean of the National School of Development at Peking University, to convene a working group of economists and legal scholars that could devise some answers. Our working group recently issued a joint statement, with support from 34 additional scholars, including five Nobel laureate economists.

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