[summerlight]

I saw this logic on HN frequently, but it's significantly flawed. It can be meaningful only if those two nations are completely independent to each other, which is a contradictory to the premise. Otherwise, there will be fairness escalations. To avoid such situation, modern global diplomacy and free trade already have developed a framework to minimize the friction and ensure a minimal level of fairness.

The problem is that China's legislation and jurisdiction are in a complete control under a single political entity, CCP and its laws are deliberately designed to be ambiguous to allow arbitrary interpretation in favor of CCP. Also, don't forget that CCP's constitution is on top of PRC's constitution.

Obviously, this situation is not acceptable in the the principle of free trading as CCP is blatantly exploiting this political system to discriminate foreign companies and effectively violate the principle of national treatment. In order to join the global free trade system, a long time ago China promised to change its political and economical practice at least minimally compatible to other states. I think the previous presidents till Hu Jintao might keep it in their minds but unfortunately Xi Jinping doesn't seem so.

[DiogenesKynikos]

China made massive concessions in order to join the WTO. It reduced tariffs from ~40% to ~3%, removed joint-venture restrictions from most sectors of the economy, broke up many state-owned enterprises, created a new intellectual property enforcement system out of nothing, and changed all sorts of laws that benefited domestic companies.

That's not to say that there are no legitimate complaints that foreign companies have, but the investment environment for foreign companies improved massively in China, and foreign companies have made huge returns on their investments. There's supposed to be a WTO mechanism for dealing with discrimination against foreign companies, though the Trump administration has put that mechanism out of action by blocking the appointment of judges to the WTO's appellate body.

[learc83]

> removed joint-venture restrictions from most sectors of the economy,

This is misleading. On paper sure, but not in reality. The majority of large companies in China will in fact be forced to participate in a joint venture. And sure there is no "law" on the books requiring forced technology transfer, but foreign companies are forced to do it.

China is a not a country that follows the rule of law. Period. The law is whatever the CCP says it is today. There can be no rule of law without an independent judiciary, and the WTO mechanism's you speak of are completely unenforceable.

>broke up many state-owned enterprises

Also misleading. They were technically "broken" up. But they still have have CCP liaison committees, and CCP members running them. The government still assists them with corporate espionage, and provides them with enormous grants and loans. Large companies in China are still state owned enterprises in all but name.

> but the investment environment for foreign companies improved massively in China

It did improve for a few years, but the current administration has managed to reverse nearly all those improvements.

[DiogenesKynikos]

> The majority of large companies in China will in fact be forced to participate in a joint venture.

That's just not true any more. Companies sometimes choose to enter joint ventures, but in most industries, they're not forced to. Many large foreign companies operate without JV partners in China.

> There can be no rule of law without an independent judiciary, and the WTO mechanism's you speak of are completely unenforceable.

WTO rulings have led to concrete changes in Chinese policy, and beyond that, China has undergone very fundamental changes to its economic structure and regulation as a condition of WTO membership. In terms of things like IP enforcement, there is something approaching rule of law in China. Western companies can enforce their IP rights through the Chinese judiciary, and they have a very good success rate.

> They were technically "broken" up. But they still have have CCP liaison committees

Having a "liaison committee" is very different from being a giant monopoly that rules the market and doesn't have to fear competition. Many large state-owned enterprises were broken up, forced to operate on a profit-basis for the first time, and forced to compete with one another and private enterprises. Private enterprises now make up a large share of the Chinese economy.

> It did improve for a few years, but the current administration has managed to reverse nearly all those improvements.

Do you mean Xi Jinping? Restrictions on foreign companies have continued to be loosened (e.g., the recent loosening of JV restrictions in the auto industry, which made Tesla's Shanghai factory possible).