As trade talks between the United States and China resume this week, there is optimism that the world’s two largest economies can reach a deal to end their destabilizing dispute: With the Chinese economy slowing and President Donald Trump in need of some good political news, both sides face pressure to compromise. A settlement, if it happens, would probably calm jittery investors and remove some economic uncertainty.
But not so fast. A truly comprehensive trade pact will be difficult, perhaps even impossible, to reach.
That’s because many of the problems Washington wants resolved in China will require more than a few regulatory tweaks. The bureaucratic harassment, theft of intellectual property, and overt favoritism toward local firms that make doing business in China such a nightmare for American chief executives are caused by the very way the Chinese economy works. Changing them means changing China’s basic economic system. Beijing’s leaders cannot possibly achieve such an overhaul in the short term—assuming they even want to.
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