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China has moved quickly to meet “reasonable demands” from the U.S. to help end the ongoing trade war but shouldn’t dismantle its governance model as some in U.S. President Donald Trump’s administration want, former Goldman Sachs China chairman Fred Hu said Monday.
Lower taxes on automobile imports and a new law banning forced technology transfers were sincere efforts by Beijing to resolve a U.S.-China trade conflict that has roiled markets for almost a year, Hu said at an annual conference on Greater China organized by UBS Group AG. Hu, founder of the investment firm Primavera Capital Group, is also on the board of UBS.
Trade officials from the two nations will meet in Beijing this week for the first face-to-face negotiations since the U.S. President Trump and Chinese President Xi Jinping agreed in December to a 90-day truce. The standoff has led to factories seeing orders slump in both countries. American farmers are hurting as is Apple Inc., while Chinese markets ended 2018 with the world’s worst stock rout.
While China has made taken some steps, it cannot and should not meet “aggressive and draconian” demands from some of the more hawkish Trump advisers such as dismantling the entire Chinese model of state-led capitalism, according to Hu. He added that instances of forced technology transfer were “very rare” in his multi-decade experience in advising overseas companies operating in the Asian country.
The Chinese style of state-led development has proved effective in reducing poverty and building public infrastructure, said Hu. “China has proven it can build infrastructure very quickly and there are merits to this model,” he said. Meanwhile “the U.S. government can be shut down over a wall.”