David Beier Op-Ed: How business leaders of the world can unite to end the trade war if the US and China are not up to the task

By David Beier and Christopher Caine

- David Beier and Christopher Caine say the business community has stepped up where governments have failed to protect the global economy in the past
- Speeding up Chinese reform, enhancing cooperation on crucial technology initiatives and establishing joint business standards could be good starting points

Full article at South China Morning Post

The ongoing US-China trade war bodes poorly for global economic growth. There are steps we can take to prevent the current tit-for-tat escalation from becoming a full-blown cancer that sickens the global economy – but action and leadership is needed, and fast. Otherwise, the governments of the world’s two largest economies risk badly draining global growth.

The recent phone call between President President Xi Jinping and US President Donald Trump offers hope that further friction can be set aside. However, previous conciliatory measures have shown themselves to be momentary reprises rather than sustainable improvement. We hope this time will be different. But if history repeats itself, where can the needed leadership come from when governments fail to provide it? From a group which has stepped up in previous contentious moments in history: the business community.

In the financial crisis of 1907, JP Morgan helped set a course for economic recovery. After the first world war, business leaders from many countries stepped up to establish the International Chamber of Commerce when governments were unwilling or unable to lead the world economy into a new era of global trade and rules-based commerce.

Thus far, China and the United States have acted in shortsighted ways. In the US, the current tariff war with China seems to be a feud without a solution, not to mention possible limits on migration and tighter rules for the transfer of information or scientific knowledge that drive innovation.

Within China, there are mixed signals. In some sectors, there have been improvements in transparency and harmonising with international norms, and some modest positive steps on intellectual property but, in the opposite direction, there has been renewed support of government subsidised state-owned enterprises and a scrutiny of private enterprise. Neither side is exhibiting a sufficient win-win leadership approach.

History has shown that when countries cooperate economically, good things can happen. For example, emerging nations have long benefited from – and built on – the advances of more established economies. US industrialisation accelerated when it used Britain’s cutting-edge technologies in textiles and steam power.

Japan fundamentally reinvented whole industries, applying miniaturisation to electronics and developing more fuel-efficient cars made to high-quality standards at lower cost, by exploiting science and management principles from the US. Despite fears of Japanese economic dominance in the 1980s, that scenario never came to pass.

In our era, the US remains strong in life sciences, energy, computer science, platform business models, aviation and space commercialisation, 3D printing and artificial intelligence. Because those fields will dominate future economic growth and enhance productivity, it is logical that China is seeking to catch up. The key point of division – and the potential solution to the central dispute – is ensuring that the conduct of both China and the US are governed by reformed international norms on trade and other international financial agreements.

This is the time for constructive dialogue about finding win-win outcomes for both sides and less “gotcha” behaviour. We hope that Xi and Trump, using their own diplomatic styles, have a sound plan based on properly understood mutual economic self-interest.

But if not, then perhaps it is time for commercial diplomacy and the practical interests of the business community to be given a chance. With this in mind, the following could underpin the business community’s engagement.

First, accelerating Chinese economic reform can dramatically alter the global economic and innovation landscape with largely positive consequences. Lifting tens of millions of Chinese into the middle class would create a vast new global market.

Second, business leaders must find ways to enable cooperation on new science and technology initiatives that can improve the human condition, instead of being subjected to trade barriers that stifle innovation. These results must be secured by building stronger public-private partnerships on artificial intelligence to address broadly applicable societal needs and on energy efficiency to lower air and water pollution.

Third, areas where business standards can be jointly established must be identified to fortify mechanisms that protect a firm’s interests, such as proprietary technologies and enterprise cybersecurity.

A business-led initiative identifying and pursuing areas of future and current common economic interest can create a more productive environment, and go far to blunt protectionist excesses.

Is there hope that this can actually be done? Yes, but it won’t be easy. Global leaders like Jack Ma of Alibaba and Tim Cook of Apple have recently made efforts to build bridges rather than toll gates. Given the economic success of both the US and China, more leaders exist in both countries and it is time for them to step forward to identify practical and constructive areas for commercial collaboration.

The specific solutions are secondary to the urgent need for engagement. Both sides have shared interests and will benefit from focusing on those, and adding to them. Let’s hope both governments would see the advantage of this leadership from their businesses, and say so.

Farsighted business leadership brought nations together around new rules-based economic behaviour in the past. Let’s do so again – and quickly – before it is too late for these two great economies and the rest of the world. Not doing so runs a high risk that an avoidable and harmful economic condition is allowed to metastasise.


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