Obama and Xi should talk tech, not trade

[Commentary] Xi Jinping, China’s designated next leader, visits the White House today, in the middle of a divisive US presidential campaign whose protagonists often find it convenient to blame China for America’s woes.

He will face protests over unfair competition and currency manipulation, and tense discussions about human rights and security. As to economic relations, there are two main threats. One is the increasing likelihood of a trade war. Recent US court verdicts forcing China to scale back production subsidies, along with draft legislation that would penalize China for currency manipulation, are aggravating relations. Yet Beijing – which has benefited greatly from open markets – has little appetite for a full-blown trade war. More worrying is the likelihood of a war over technology transfer that could dominate the relationship in future, as complaints mount from US companies forced to cede intellectual property rights as a condition for operating in China. This is serious because Beijing is intent on moving up the value chain and realizes that production of more sophisticated goods – especially control over their design and distribution – is where the real profits lie.