You think it’s about tariffs? U.S., China forge the future

With the arrival in Beijing this week of the United States’ top trade negotiators, you might think that the U.S. and China are about to enter high-level talks to avoid a trade war and that this is a story for the business pages. Think again. This is one for the history books.

Five days of meetings in Beijing with Chinese, U.S. and European government officials and business leaders made it crystal clear to me that what’s going on right now is nothing less than a struggle to redefine the rules governing the economic and power relations of the world’s oldest and newest superpowers — the United States and China. This is not a trade tiff.

“This is a defining moment for U.S.-China relations,” said Ruan Zongze, executive vice president of the Chinese Foreign Ministry’s research institute. “This is about a lot more than trade and tariffs. This is about the future.”

In one corner stand President Donald Trump and his team of China trade hard-liners, whose instinct is basically right: This is a fight worth having now, before it is too late, before China gets too big.

And in the other corner stands President Xi Jinping of China, whose instinct may also be right — this is a fight worth having now, because it is too late — China is just too big.

Here’s how we got here: In Act 1, U.S.-China relations were all geopolitics, with the U.S. and China against the Soviet Union. That lasted until the late 1970s, when Act 2 began: China shifted toward capitalism, becoming a huge factory and new market — and 30 years later turned into the world’s second-largest economy.

In large part this was due to the work ethic of the Chinese people, the long-term thinking of China’s leaders and the government’s massive investments in infrastructure and education. But in part it was also due to China’s willingness and ability to bend or ignore rules of the World Trade Organization.

Years later, as it has grown, China has refused to voluntarily lower its tariffs. Moreover, foreign companies that wanted access to China’s market were forced to pay to play — to have a Chinese partner and be willing to transfer their advanced technology to them.

As a result, over time, Beijing was able to grow Chinese competitors to Western companies in its protected market, and then unleash them on the world as giants.

U.S. and European businesses tolerated all of this because they were still making money in China or were afraid to be frozen out of its massive, growing market — until a couple years ago, when more and more told their governments: This is not working anymore. That ushered in Act 3.

Act 3 opened in October 2015, when China announced its new longterm vision: Made in

China 2025, a plan to dominate 10 next-generation industries, including robotics, self-driving cars, electric vehicles, artificial intelligence, biotech and aerospace.

The last thing Beijing wants is a U.S.-EU united front demanding it play fair.

Don’t get me wrong. I welcome China focusing more on 21st-century industries. It could be better for everyone.

Economics is not like war — they can win and we can win. On one condition — we all play by the same rules.

That is what this moment is about — that’s why it’s a fight worth having.