U.S.-China Trade

After the US initiated two WTO cases* against it last year, China has since worked to develop a National IP Strategy, requiring China to “explore the possibility of establishing specialized IP courts to deal with IP-related civil, administrative, and criminal cases.” The strategy was developed by China’s National Working Group for IPR Protection, which was established in 2005. The body is made up of 13 officials from 12 IP-related agencies and ministries, such as Commerce, State Intellectual Property Office, and Customs.

Released June 17, this new, unified system would help to more easily transfer administrative cases to criminal enforcement courts. The new strategy also seeks to realign jursidiction in order to appropriately address cases requiring specific, technical knowledge, such as with patents. Successful implementation of this strategy would result in:

• improved judicial interpretations
• refined litigation procedures
• beefed up subject matter expertise using expert witnesses and technical investigations
• improved patent standards policy
• mechanisms for compulsory licensing

This series of events validates the effectiveness of escalating trade malpractices to the WTO. So long as overarching governance systems are in place to provide check and balances, neutralizing the economic disparaties globally becomes an more approachable issue. Although time will tell whether this strategy truly addresses global concerns of Chinese IP policy and enforcement, steps are being made by the country to advance in the right direction. Engaging its more developed trade partners to share best practices in trade will provide a wider range of perspectives on the matter, while allowing countries like the US feel as though they are being heard.

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* The first case opened against China was in response to an absence of protecting and enforcing copyrights and trademarks, and the second on China’s obstruction of trade of books, videos, music, and films.

China is working to review oil policy and strategy to determine the most favorable path forward to “bolster” oil company profits and avoid [prolong]  rising fuel costs. One large driver for this effort is the upcoming Olympic games, which has been a sore spot for the country politically and logistically these past several months. Ensuring a plan is in place to pre-emptively manage whispers of inflation prior to its Olympic debut is on its shortlist of initiatives. The Sichuan earthquake and impacts to Consumer Price Index (CPI) is another factor making for a delicate decision making process.

The most viable of proposed paths is the suggestion to relax windfall production profit tax, lessening the burden on China’s heavy hitter producer PetroChina and champion refiner Sinopec. Two years ago, a tax was established to charge domestic crude oil producers 20-40 percent of revenues at oil prices above $40 a barrel. The relaxed tax policy would raise the point of taxation to $60 a barrel, and is estimated to preserve “up to $6 billion in revenue on China’s 1.36 billion barrels of annual output.”

Other considerations included leveraging local fuel supplies through cutting the costs of imports or raising those of exports.

Chinese domestic prices are far below global rates for fuel. In the past two years, China has only raised domestic prices twice, the most recent spike being 10% last November. Crude oil has come up 39% against China’s 10%. To better demonstrate the widening gap, what about this statistic:

Beijing would have to increase its retail diesel price by 50 percent and gasoline by 25 percent to match that of the top consumer in the United States, where consumer fuel taxes are similarly low.

Reuters has reported that China has the financial “wherewithal” to hold out for awhile before having to address aligning its fuel prices with market rates. Though it’s the ultimate objective, the Chinese government is doing everything in its power to implement this at a measured pace.

Stan Abram’s China Heresay blog led me to this James Fallows’ article for theAtlantic.com, recounting his personal experience in China with middle school girls, who he describes as “charming” and “open-spirited.”

A reminder that despite its unfortunate portrayal as a looming military and economic threat, China is doing its best to address domestic concerns, be it managing its massive and aging population, equally distributing wealth between cosmopolitan and rural populations, or staying current in this information age.