[eznoonze]

Free market only works when everyone follows the same rules. When you have a player like China who is dead set on taking advantages of the rules but never taking the responsibility, you create an one-sided situation.

Trade is not just an economic issue. It's a political issue when you have China in the game.

[AlexandrB]

China may take advantage of the rules, but patient 0 for unfairly manipulating global trade is the United States. Consider all the pro-Hollywood trade agreements that have strengthened IP rights and weakened the public domain. Or the constant interference in South American politics. Or the fact that the United States basically controls the IMF and uses it to enforce economic policies beneficial to its own multinational corporations.

[DiogenesKynikos]

Developed countries benefit from free trade, while developing countries benefit from some level of protectionism. This isn't peculiar to China.

There's always a tension. Developed countries want as much access as possible for their advanced corporations to all markets around the world. They also want to be able to exploit cheap labor in developing countries without transferring any know-how to local competitors. Developing countries want to be able to export to the large markets in the developed world, but also want to protect their fledgling industries from much stronger competition from the advanced countries. They also want to acquire know-how from the developed world, in order to move up the value chain. Toyota probably wouldn't exist today if Japan hadn't protected it from American competition after WWII. This is why there are special provisions in the WTO for developing economies - the same policy doesn't fit countries in all stages of development.

Because of its uniqueness (both as the largest developing country in history and as a former non-market economy), China is actually subject to additional restrictions under the terms of its accession to the WTO. For example, other countries have increased leeway to place tariffs of Chinese goods, without China having the usual right to retaliate. It's not true that China is a particularly egregious rule-breaker.

I think that fundamentally, these claims of China breaking all the rules and taking advantage of everyone come from a place of fear that China will become the dominant world power - not from an actual understanding of Chinese economic policy.

[jayd16]

The global stage _is_ a free market. Actors making their own rules is what a free market looks like. Complaining about fairness while demanding a free market is a contradiction.

You want US global allies to enforce an artificial market, which I'm not really against at all. Its just very silly to call that a free market action if China's actions aren't.

[aeternum]

This isn't always true. Free trade has been shown to work fine even if other countries are imposing tariffs and performing currency manipulation. There may be a temporary deficit, but those dollars still need to eventually flow back into the country with the trade deficit, and lose value over time which is an advantage to the country with the deficit. Australia and NZ have been able to build very strong economies using this approach.

Where it doesn't work is when other countries are willing to engage in theft, including intellectual property theft and industrial espionage.

[themagician]

The “free market”, as it’s often portrayed, is a magical idea that exists only in text books. It’s not real. The real market is a mess of information asymmetry, unpriced negative externalities and govern emend subsidies.

Economic theory is great for determining the direction of economic policy but not defining policy itself.

[Merrill]

There are only a limited number of markets where large numbers of buyers and sellers transact for commodities of well understood characteristics.

The fundamental transaction of capitalistic societies is the "deal", where sellers vary the benefits of their products and conceal their deficits and where buyers conceal their willingness to pay as well as the exact thing they want to buy. Typically there are no more than two or three sellers (e.g. Airbus and Boeing) or two or three buyers (e.g. the market for very advanced fighter aircraft).

The first thing you learn in business school is that you must have product differentiation and must at all costs avoid being in a commodity business..