China-U.S. Trade Law : International Trade Lawyer & Attorney : Baker Hostetler Law Firm : Trade Remedies, Customs & Export Controls

China’s goals of international recognition during the last decade, in addition to accession to the World Trade Organization (“WTO”), include most prominently acceptance by the United States as a market economy. There have been at least two motivations: to have its creation of a market, “with Chinese characteristics,” recognized and approved around the world; and to be liberated from the trade remedy methodology tailored specifically for non-market economies. The former is more psychic; the latter is pragmatic.

Non-Market Economy Status

World trade rules are built around principles of free trade. Free trade as an ideal type refers to unimpeded private market transactions where governments, monopolies, and state enterprises do not have enough influence to distort the conduct or outcomes of private enterprise competition. The free private enterprise system assumes, as did Adam Smith, that the selfish private acts of individuals and their organizations will yield, out of their competition and interaction, a greater public good. The market, not government, defines and produces the public good. It also assumes that governments and monopolies, when regulating or controlling private transactions, distort markets and thus are harmful to the public good.

The role of government in the ideal free private enterprise system is limited, mostly to regulating anticompetitive behavior and breaking up excessively large conglomerates and monopolies that prevent free competition. Of course, such limited government is a fiction. Governments have many roles in civil society, and all impact the economy.

All governments raise revenue through taxes. They make judgments about who most can afford to pay. Despite the periodic calls in the United States for a “flat tax” imposed on everyone equally, taxes everywhere are “progressive,” graduated according to the perceptions of what can be afforded and by whom, including business enterprises as well as individuals. Taxes on transactions – sales taxes or value added taxes – are also common. The form of taxation, the extent to which taxes are graduated, and the taxpayers (corporate or individual) all express public policies favoring some over others. A core public policy in the United States favors private home ownership, which has produced special tax provisions affecting everything from bank loans to construction materials. All such government interventions and taxes distort markets in one way or another. Yet, like death, taxes are inevitable and are the most obvious form of government intervention in markets.

Governments play additional roles. Every free market system assigns governments a role in forbidding the formation and operation of anticompetitive monopolies and trusts. Governments may regulate to protect the health, safety, and welfare of citizens. Such regulations typically raise costs of production for private enterprise, and impose certain manufacturing methods and ways of doing business. Hence, despite the ideal type, governments everywhere intervene in the free market.

Corporations rhetorically champion free enterprise, but in practice they seek competitive advantages that inevitably translate into limitations on competition. Governments regulate to limit or eliminate such corporate behavior. The nature of competition is to seek an advantage and a superiority over others. Such advantages are defined by reducing the competitive abilities and positions of others. Individuals and corporations idealize competition only to the extent that competition can improve their situations, which by definition requires the degrading of the competitive positions of others. Consequently, free private enterprise systems foster competitors whose objective is always to reduce competition. Governments overseeing such systems endeavor to maximize competition, while protecting against the release into the stream of commerce of products and practices inimical to the health and safety of individuals and society.
This ideal type of free enterprise system is the theoretical antithesis of a state-controlled or command economy. In the ideal type, government intervenes only as required, reluctantly, and while trying to guarantee free competition. In a command economy, government seeks to direct all economic activity, deciding what needs to be manufactured, to whom it should be distributed, and at what price. Government extracts rents from this production and, therefore, in control of the entire economy, can raise revenues anyway it likes. Markets function only to the extent that governments permit, in any particular sector, the interaction of willing buyers and willing sellers. Mostly, demand is regulated by supply, the latter controlled entirely by the government.

The United States, since the ascension to power of Mao Tse-Tung, has treated China, dominated by state-owned enterprises and with a tax system dictated by government (rather than negotiated among competing interests), as a non-market economy. However, China, since the “opening” of Deng Xiaoping, no longer regards itself as a non-market economy. Instead, China thinks of itself as a capitalist, market economy, albeit with “Chinese characteristics.”

There are many indicia supporting China’s self-image because substantial competition has grown up in China. Capitalist goods are everywhere and are sold competitively throughout the country. There are advertisements promoting different prices for the same or comparable goods. People decide what to buy, from food to cars, such that supply does not control demand, and the government does not control supplies. Labor has become mobile, with people moving from one part of the country to another, from one kind of job to another, from one corporate entity to another making or selling the same product. Prices vary with supply and demand, not dictated by government.

There are many indicia that China remains a command economy. The government owns and controls the supply and prices of natural resources and public utilities. The government controls banks and insurance, lends money through the banks according to government policy and rates, controls the currency and its value. The most important economic sectors, such as steel production, are dominated, when not exclusively captured, by state-owned enterprises. Through the control of money and loans and prices, the government dictates the supply and demand for the most important products and services.

The global economic meltdown with the fall of Lehman Brothers in September 2008 made the United States look more like China than the other way around. The U.S. government took effective control of major banks and insurance companies, bought out one of the leading economic sectors – automobile manufacturing – and shaped subsidy programs throughout the economy designed to assure the success or survival of enterprises chosen by the government. Yet, while insisting that it is the world’s leading capitalist economy, the United States denied China’s claim to be recognized as a market economy.
 

Symbolism Of Market Recognition

China, as a matter of national pride and self-respect, has resented the American insistence that massive American subsidies and market intervention preserved a capitalist, market, free enterprise system, while identical conduct in China guaranteed that China would be considered outside the mainstream, along with Cuba and Vietnam and North Korea, as a non-market economy. The more China has insisted that the United States should recognize it as a market economy, the more the United States has resisted. Excuses have become cumulative, most prominently in the American complaint over China’s refusal to float fully the value of its currency, notwithstanding that U.S. currency did not float freely until 1971, and the United States certainly was not considered a non-market economy before then.

Recognition as a market economy has come to mean, for China, fulfillment of a promise it perceives was made in 2001 when China acceded to the WTO. Even though the WTO agreement projected recognition as a market economy by 2016, and then only upon the satisfaction of various criteria, China’s Commerce Minister now insists that the United States agreed to recognize China’s market economy status by 2010 and offers a sense of betrayal that recognition has not happened.

The Practicalities Of Market Economy Status

In only one significant respect does recognition as a market economy matter: when complaints are brought that Chinese goods are dumped in the United States, the methodology for determining whether there is dumping, and if so, how much, is different for non-market economies. This distinct methodology gives the United States Department of Commerce more discretion and flexibility to find dumping, and to inflate the dumping “margin,” the measure of how much dumping and consequently how much duty will be owed for the merchandise to be imported into the United States.

Dumping is determined in one of two ways: either a good is sold abroad for a price lower than the price at home, or the costs to produce the good exceed the price at which the good is sold abroad. When Chinese goods are subjected to this second measurement, the cost of production, the non-market economy methodology becomes critical.

Non-market economy status presumes that, in the absence of markets, there are no market prices. It is then theoretically impossible to determine the cost of production because it is impossible to determine the costs of any of the inputs. There are no market wages; no market rents; no market utilities. Raw materials have no market prices, nor do any component parts.
When the inputs are imported from a market economy, dumping analysts use the price the Chinese manufacturer has paid for those inputs. But when the inputs are domestic products, analysts assume there is no market price for them. The analysts then seek and apply “surrogate” prices – prices of the same input in a “market” economy that, supposedly, is at a similar level of development as China. Surrogate values may come from many different countries, but American official analysts have favored (for China) India, Bangladesh, Indonesia, and occasionally other countries.

The selection of surrogate values is highly contentious and is decided, in the end, by U.S. government officials. They have decided that freight costs, for example, could not be used if derived from a Chinese-flag ship. They have chosen, instead, some of the highest shipping rates in the world.

Subsidies And Market Economy Status

Until November 2006, treatment of China as a non-market economy did have advantages for China. A “subsidy” in international trade is a financial contribution from a government that is market-distorting. Where there is no market, there is nothing to distort. Therefore, until November 2006, the United States had never brought a subsidies (countervailing duty) case against China. Subsidies could not be alleged; they had to be treated as costs of production susceptible to the application of surrogate values.

It was always thought that China could not and would not be exposed to countervailing duty allegations unless and until it might be recognized as a market economy. The Chinese Government, consequently, stayed out of trade remedy disputes, as dumping is the business of business, not government. Dumping is determined by prices, and companies, not governments, set prices. Moreover, it was exceedingly difficult to address some of the “inputs” this way for a cost-of-production analysis.

The 2006 mid-term elections delivered a significant Democratic majority pressuring the Administration to get tough on China, especially as to alleged subsidies. A petition alleging subsidies to coated free sheet paper was pending. The Department of Commerce, soon after the elections, decided to initiate a countervailing duty investigation, while refusing, still, to recognize China as a market economy.

China protested the apparent anomaly – a non-market economy subjected to a countervailing duty investigation – but to no avail. Various legal issues emerged and several are still the subject of WTO proceedings initiated by China. None has been resolved by the WTO, and meanwhile the United States has found subsidies and imposed countervailing duties in 12 cases already. All of these cases were accompanied by antidumping petitions, and a cumulation of dumping and subsidies duties have been imposed in 26 cases since 2007. Petitioners complaining about unfair competition from China now routinely file simultaneously antidumping and countervailing duty petitions.

Why Non-Market Economy Status No Longer Has Practical Meaning

The decision to investigate subsidy allegations and impose countervailing duties while still treating China as a non-market economy rendered the non-market economy status practically meaningless. It is not as if, were China tomorrow to be recognized as a market economy, anything of practical value would change.

The United States has been applying surrogate values for subsidy allegations against China throughout the economy. For the allegation that China was not charging enough money for the commercial use of land in rural Shandong Province, the Department of Commerce used land values from suburban Bangkok. The Commerce Department ignored entirely expert testimony that the use of such values was nonsensical from the perspective of economics and land use.  And Commerce treated any input supplied by a state-owned enterprise as a subsidy, the value of which was to be determined by selection of a surrogate value in a market economy. 

The rationale for the application of surrogate values is based on Certain Softwood Lumber from Canada.  Even though a WTO panel found the use of such values improper in the case of Canada and a NAFTA panel found it illegal, the Commerce Department dismissed the NAFTA panel as having no precedential authority and the WTO panel as ambiguous. Beginning with coated free sheet paper, the Commerce Department has cited its own administrative determination in the softwood lumber case as the basis for its treatment of China.

The Commerce Department argues that, even though Canada is indisputably a market economy, Canadian provincial governments own so much of the forests that any price for standing timber cannot be a market price. It did not matter that nearly twenty-five percent of the standing timber sold in Quebec is private, as is more than fifteen percent in Ontario. It did not matter that the pricing scheme for public forests in Quebec was based entirely on the prices in the private forest. The Commerce Department reasoned that the public sector was so large compared to the private sector that the private sector prices were driven by the public sector and therefore could not be used. It reasoned that the residual value methodology applied by Ontario, whereby the market price of manufactured lumber required certain pricing of the raw material, could not be used because most of the natural resource was in public hands. It did not matter that the NAFTA and WTO panels disagreed, as did a number of notable experts.

China, over the course of three years, has failed to successfully challenge any of the Commerce Department surrogate value applications in U.S. courts. [confirm] Consequently, the Commerce Department has been laying a foundation of subsidy findings as “administrative practice,” upon which it can rely for virtually anything that may arise in the Chinese economy. Bank loans, even from commercial banks, can be treated as non-market rates because of the alleged dominance of state-owned banks setting the market rates; prices for inputs from private companies can be set aside as long as there are state-owned enterprises in the same business. It will be very difficult for China to prove that the state is not dominant in one sector or another, and the burden of proof will fall on China.

The United States can recognize China as a market economy and continue to apply surrogate values and non-market economy methodologies in trade remedy disputes because China has focused on the issue of market economy status instead of on the methodology the United States developed in the softwood lumber dispute with Canada. The core issue remains not the nomenclature, but the predominance of state-owned enterprises.

The Strategic And Economic Dialogue

The Strategic and Economic Dialogue in Beijing in May 2010 seemed to produce only one Chinese headline: that the United States was going to recognize China as a market economy. The expectation was variously seen as fulfillment of a promise and as an essential American concession, a Chinese victory of sorts. The United States, as it happens, did not provide such recognition, only promising to continue a discussion about it. Consequently, the United States now knows it is holding something that China values highly, and yet is not worth very much, an enviable negotiating position. China, for its part, needs to recognize how little such recognition means, and move on to more meaningful discussions.
 

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Chief Judge Jane A. Restani of the United States Court of International Trade (“CIT”) on August 4, 2010 ordered the United States Department of Commerce (“DOC”) to forego the imposition of countervailing duties on pneumatic off-the-road tires from the People’s Republic of China. Her decision, in GPX International Tire Corporation v. United States, was based on her ruling that US law prohibited DOC from imposing duties higher than the amount needed to offset subsidies on imported products.

The problem for DOC, inherent in the case and as posed by Judge Restani, is that DOC uses surrogate values presumed to be unsubsidized, rather than a company’s actual production costs, to calculate Normal Values. DOC compares these Normal Values in its non-market economy antidumping methodology to the export price, a methodology that should, at least in theory, offset any subsidies on the production of the merchandise (because the comparison has been taken against unsubsidized inputs through surrogate values). If DOC were to impose countervailing duties to offset subsidies that benefit the production of the merchandise, then it would be offsetting the same subsidies twice.

Double counting of subsidies does not occur with DOC’s market economy dumping methodologies (19 C.F.R. §§ 351.405 & 351.406) because, in those cases, Normal Value is calculated based on actual prices in the foreign market and actual costs incurred in that market. Thus, if there were any subsidies imbedded in those prices or costs, they would not be offset by the antidumping methodology and would need to be addressed separately in a countervailing duty investigation.

Judge Restani’s August 4, 2010 decision followed an earlier decision in the GPX case where she sent the matter back to DOC to find a way to avoid the double counting problem. In the earlier case, Judge Restani found that, while DOC had discretion to impose countervailing duties on Chinese merchandise while still considering China to be a non-market economy (the central issue in dispute), DOC had to avoid double counting of subsidies when it applied the countervailing duty law and the antidumping non-market economy methodology to the same products at the same time.

DOC interpreted Judge Restani’s earlier decision as giving it three options: (a) not apply the countervailing duty law; (b) apply the market economy antidumping methodology in that case; or (c) lower the cash deposits imposed in the antidumping case by the amount of cash deposits imposed in the countervailing duty case. DOC decided to lower the antidumping deposits by the amount of the countervailing duty deposits. Judge Restani found that option contrary to US law because there is no provision in the antidumping statute to lower duties by the amount of countervailing duties and because that option is unreasonable as it requires the parties to go through the expense of countervailing duty proceedings that are essentially useless.

Judge Restani ordered DOC to forego imposing countervailing duties on off-the-road tires from China because DOC demonstrated in that case that it did not have the ability to determine the degree to which double counting was occurring in its non-market economy language and offset it directly within that methodology. Thus, the CIT has left open the option in future cases for DOC to try new methodologies to eliminate the double counting within the antidumping nonmarket economy methodology. DOC continues to have the option of imposing countervailing duties to products from China in cases without a companion antidumping case on the same products, or in cases in which it uses its discretion to recognize a market-oriented industry (“MOI”). In that latter instance, considering MOI status, it could continue its general policy of not recognizing China as a market economy while using a market economy methodology for a particular industry. DOC has never recognized an industry in China as “market-oriented,” but it does have the statutory authority to decide to apply market economy methodologies on a case-by-case basis.

DOC, or the petitioners in the GPX case, have the right to appeal Judge Restani’s decision to the Court of Appeals for the Federal Circuit (“CAFC”). Should they do so, that higher court could overturn Judge Restani’s decision, affirm it, or modify it. Were the CAFC to overturn the decision, DOC would be free to apply countervailing duties to the same products on which it used the non-market economy antidumping methodology. In deciding whether to appeal, however, DOC must consider the risk of appealing and losing. Right now Judge Restani’s decision is binding on DOC only in the GPX case: it does not set precedent that DOC would be forced to follow in all future cases. Were DOC to appeal and have the CAFC affirm Judge Restani’s decision, that affirmation would be binding precedent, prohibiting DOC from applying both the CVD law and the non-market economy methodology to the same merchandise.

Judge Restani’s decision was based solely upon US law. However, China has challenged at the World Trade Organization, on the same grounds of double-counting, the application to China of the countervailing duty law while DOC refuses to recognize China as a market economy. Judge Restani’s decision in GPX demonstrates the value, at least to the companies involved, of appealing to the US court, rather than relying solely on WTO challenges. As we noted in earlier articles on this blog (US Court Decision Ought to Change Chinese Thinking and WTO Challenges Not Always a Panacea for Respondents in Trade Litigation), the WTO process is designed to vindicate governmental interests, but does not often provide much comfort or relief for commercial interests. Appeals in the US courts, by contrast, are a right belonging to the companies themselves that have been hurt by the agency’s challenged actions and, when those companies win in U.S. courts,, the remedy can provide immediate retroactive relief.
 

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One of the most troubling features of the growing tensions between China and the United States is that both countries legitimately have a lot to complain about, and typically they are the same things. Three issues are particularly conspicuous at present and at the core of difficulties in the trade relationship – the definitions and status of “market” and “non-market” economies; the role of governments as owners of strategic economic sectors and retaliation over grievances arising from that role; and cyberattacks. When China and the United States criticize each other, they often are launching their complaints from inside glass houses, fortifications especially vulnerable to retaliation.

Market Economies

Almost every member of the World Trade Organization, and even countries (such as Russia) that are not, for international trade purposes are considered “market economies.” The designation is important because the rules of fair trade are written to promote markets, rewarding market transactions and penalizing conduct judged to distort markets. The distinctions emerged at the dawn of the Cold War when the rules enabling private enterprise to compete with state-directed economies were written.

State economic interventions, according to world trade rules, distort markets. State-directed economies – “non-market economies” (“NMEs”) – are inherently distorting. World trade rules deal with them through exclusion, denying them entitlement to the benefits of favorable assumptions.

Although China agreed, when it acceded to membership in the WTO in 2001, that it was not yet accepted as a market economy, it did not expect such recognition to be far behind. Now, nearly a decade later, it seems nowhere in sight, and largely because of objections raised by the United States.

The United States sees too much state direction in the Chinese economy. National plans are reinforced by regional and local planning. State-owned enterprises are dominant, particularly in the most important sectors of steel and energy production. State-owned banks control most lending. Tax schemes systematically favor designated sectors. Utilities providing manufacturers with energy are state-owned. There is no private ownership of land. And today, most important of all, currency is tied to the dollar and does not trade freely in international markets.

China does not see its economy this way. State enterprises are enterprises whose profits go to all shareholders, who are the people of China and not small investing bands of capitalists. They are controlled by boards with mandates to operate competitive, profitable businesses. Banks, controlled by the state, protect the state’s interests, and thus avoid reckless and feckless lending that can jeopardize whole economies. Labor is mobile and subject to competition. Land tenures in Britain, and some other Commonwealth countries, are based on the theory that the Crown owns all of the land, but thriving markets in land tenures exist. No one claims that the Crown’s ownership of all of the land in these countries suggests they are not market economies. The dollar began to float freely and trade on international exchanges less than forty years ago, and no one suggests that prior to the collapse of Bretton Woods the United States was not a market economy. In China’s view, all the people of China are the shareholders of the economy at large, but no less capitalistic in their support of competition and free enterprise. Most observers of China today remark on the Chinese worship of money, no less than in traditional capitalist societies.

The American indictment of China as an NME is defended now from inside a glass house. After the fall of Lehman Brothers in September 2008, the federal government in the United States took large ownership positions in many key banks. The government took effective ownership of the automobile industry. The Congress of the United States endlessly writes tax laws to favor one industry or another, especially the larger ones dependent on exports. Property is private, but government institutions set the terms of ownership and all of the financing that makes ownership possible. And the government in the United States intervenes in the economy regularly to create and save jobs, regulating the labor market, encouraging companies to hire labor and discouraging dismissals.

Neither China nor the United States is an ideal market economy. The distinctions might not matter practically, representing different paths to the acquisition and distribution of the benefits of commerce, except that they do in the application of trade laws. China thinks itself stigmatized by its designation as an NME, and it is disadvantaged in international trade.

Until 2006 there was at least a trade-off. Trade law, as applied everywhere, recognized that state intervention in the economy could not be market-distorting if there were no market. Consequently, trade remedy actions based on subsidy allegations could not be initiated, both because there was no way to measure a subsidy in the absence of market prices, and because a subsidy by definition must distort a market and in an NME there is no market to distort.

In late 2006, the United States began to have things both ways. It said China was enough of a market economy to justify bringing subsidy cases against its exports, yet not enough to shed its designation as an NME.  Ever since, China has been manifestly subject to a deliberately unfair trade regime. Yet, when China takes exception, it does so from within its own glass house, and not only because of the conditions that shaped American views in the first place.

Even as China began in 2006 to defend its practices in the United States, its conduct tended to reinforce the indictment instead of refuting it. Instead of acknowledging that it had little control over regional and local governments, their “planning” or their commercial practices, the central government, citing to the Constitution of the People's Republic of China, asserted that all governments reported to it.  Instead of acknowledging difficulty in amassing information demanded by U.S. authorities in trade investigations, it tried to answer questions without verifiable information. Instead of leaving private enterprises in China to find counsel and defend their own interests, the government convened supposedly independent chambers of commerce and largely directed the management of China’s legal defenses. It relied principally on the advice of Chinese lawyers with very limited knowledge of U.S. law. All these actions tended to convince American investigators that China is state-run and not ready to be considered a market economy.

As a practical matter, this issue has lost most of its importance. U.S. authorities have developed methodologies that would reach the same conclusions about fair trade even were China now recognized as a market economy. But symbolically this issue remains critical.

China’s Retaliation: Mutual Accusations Of Subsidies

Exhausted, perhaps, by the apparent futility in its claim that it should be recognized as a market economy, China has adopted an alternative strategy, accusing the United States of similar market deficiencies. China now formally accuses American exports of being subsidized in an economic system marked by substantial state involvement.

China does not deny that the development of its automobile industry has been heavily subsidized. Instead, China argues that it has graduated from subsidization. This view, however, neglects the history of international trade disputes centered on the privatization of state enterprises that followed on the collapse of Communist regimes. The United States accused all such enterprises, especially in the steel industry, of continuing long-term benefits, arguing that privatization could not extinguish the value of subsidies unless the sale of the state enterprise took place at a full market price. The United States placed the burden of proof that no subsidies passed through from the state to the private enterprise on the foreign private enterprise, a burden virtually impossible to bear because of inadequate documentation.

China, perhaps preemptively, has accused the U.S. automobile industry of exporting subsidized vehicles to China. As we discussed on December 1, 2009 on this blog, the countervailing duty investigation launched in November 2009 arises from a petition that argues the American automobile industry is in historic decline and survives only due to massive government subsidization. The central problem of these accusations, however, is that they are hurled from a glass house. The United States will now almost certainly accuse China of subsidizing the automobiles China is gearing up to sell to the United States. Hence, while the industries in both countries are trying to develop fuel efficient automobiles that will eliminate carbon emissions, thereby serving mutual objectives related to saving the planet, trade laws in both countries already are impeding direct competition based on the quality of the product.

China’s action, contending that the United States does not produce automobiles through free market enterprise, is a transparent retaliation for the American insistence that China is a non-market economy. However, this action carries the disagreement forward into the terrain of the future, where China and the United States need most to cooperate.

Cyberattacks

The United States has complained for a long time that China has subjected American defense and security establishments to incessant and invasive cyberattacks. These complaints took on a new character and dimension when Google complained that a coordinated Chinese assault on Google customers included an invasion of the accounts of Chinese dissidents. Google, already criticized for accepting Chinese government censorship that affects the internet in no other country, found the latest attacks intolerable. Google threatened to leave China.

The Google-China confrontation led Secretary of State Hillary Clinton to deliver a major speech on “internet freedom” that called for international condemnation of China.  Jack Goldsmith, Harvard Law School professor and former senior Justice Department official in the Bush Administration, responded quickly in The Washington Post: “[T]he problem with Clinton’s call for accountability and norms on the global network,” Goldsmith wrote, “is the enormous array of cyberattacks originating from the United States. Until we acknowledge these attacks and signal how we might control them, we cannot make progress on preventing cyberattacks emanating from other countries.”

The cyberattacks from China are presumed to be state-directed because of the state control and censorship of the internet imposed on companies such as Google. Attacks from the United States are presumed, at least by Americans, to be the work of private individuals, free-lancers, the sort of people who fill e-mail boxes incessantly with spam. Goldsmith accepts this orthodoxy, noting that “Scores of individuals and groups in the United States design or employ computer payloads to attack government Web sites, computer systems and censoring tools in Iran and China. These efforts are often supported by U.S. foundations and universities, and by the federal government. Clinton boasted about this support seven paragraphs after complaining about cyberattacks.”

Boarding Up The Glass Houses

China surely knows at least as much about what is happening in its cyber sphere as Professor Goldsmith. The American complaint about Chinese interference with the internet appears well-founded, as is the American complaint about China’s control of its economy and China’s subsidization of industry. But each of these complaints is launched from a glass house. Until China and the United States acknowledge mutually the problem – that their legitimate reciprocal complaints need more solution than aggravation – such complaints will compound and multiply, and the two countries will grow further apart and more antagonistic. They must either appreciate the view that glass houses uniquely afford – a place from which one can see out very well, but others can also see in -- stop throwing things at each other from inside the glass houses, or board them up. The last choice, which may define the direction in which things are going, is probably the worst of all.

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