The Observer

US-China relations discussed at international summit

Jack Heneghan, Staff Reporter

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The U.S. has long been a world superpower, but some suspect a new challenger is giving the country a run for its money: China. The U.S.-China International Summit at Case Western Reserve University was held for the second year in a row to discuss U.S.-China relations and the current trade war between the two countries. The event, hosted in the Tinkham Veale University Center Ballroom, occured on Sunday, Nov. 4.

The summit began with keynote speaker Steven Feldman’s thoughts on the countries’ economic relationship in the coming future. Between 2015 and 2016, Feldman collected data on reform in China in areas of business innovation, law, finance, the anti-corruption campaign and State Owned Enterprise (SOE). He remarked that when doing business in China, the government’s mantra was “the government in omnipresent.”  

Feldman has written a book on his findings and plans to write an entire series on his research.

Discussing the future of the SOE sector, Feldman said its existence is key in maintaining Chinese employment and deemed the sector vital to China’s economy. He attributed the SOE’s massive size to the government itself.

“The Chinese government poured hundred of millions of dollars into the sector after the financial collapse in 2008,” he explained. Because less than 10 percent of loans in China went toward the private sector, Feldman said that SOEs were able to grow to the size of a “powerful political interest group,” which can sway politics. He added that SOEs cannot be reformed because of “cultural density.” SOEs are structured with dense networks of self-protecting mechanisms that prevent employees from being fired.

Feldman also blamed the elite families of China as a major reason SOEs cannot be reformed.  He said that influential families use the SOEs as “piggy banks,” draining money to make money themselves. These families constitute China’s “Princelings,” and are also a large interest group within the government.

Later in his speech, Feldman also noted that China will have difficulty moving away from a purely manufacturing economy due to its weak intellectual property laws. In the current system, laws help Chinese manufacturers produce convincing knock off products without fear of repercussion. This, he believes, is preventing Chinese citizens from creating independently designed products.

The next event of the night was a panel about innovation and entrepreneurship, featuring James Gilmore and Robert Brown. Brown discussed a modern “Cold War II,” which he believes is a result of long growing trends; he claims that China and the U.S. were destined to collide.

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US-China relations discussed at international summit