Hank Paulson, former US Treasury Secretary during the 2008 financial crisis, finds some bright spots in how the Trump administration is dealing with the rising trade tensions with Beijing.
“I do see it as positive that the Trump administration has been looking to increase U.S. exports to China. I think there are some areas that are really very suitable for that,” Paulson said during an event hosted by the China Institute in New York City on Thursday. He believes China could be a major market for U.S. industries such as natural gas.
The former CEO of Goldman Sachs has dealt with three generations of Chinese leaders. He negotiated with China on economic reforms and now works with China to tackle sustainable development and climate change at the Paulson Institute.
Paulson also applauded the administration’s fight against China’s intellectual property theft. Last August, President Trump signed an executive order to probe the issue. Seven months later, the U.S. Trade Representative concluded Chinese theft of intellectual property costs America between $225 billion and $600 billion annually.
“I really like the fact that the Trump administration is putting a big emphasis on technology and intellectual property,” said Paulson, who believes the technology industry is a core advantage of the U.S. and an area worth negotiating with China. “I’m not expecting China to abandon its industrial policy, but I do believe there is plenty of room to change the competitive landscape.”
Opening up will benefit China
Paulson doesn’t agree with all Trump’s comments on trade, however. He doesn’t see the trade deficit as a necessarily bad thing for the U.S., nor does he support Trump’s tweet that trade wars are good and easy to win. “Contrary to what the President of United States said, no one wins a trade war,” said Paulson.
Paulson, who served under President George W. Bush, was among a list of prominent GOP heavyweights who endorsed Hillary Clinton during the 2016 presidential campaign. In a blistering Washington Post op-ed, he criticized Trump’s business history and populist rhetoric, calling a Trump presidency “unthinkable.”
Paulson sees regulations and standards — and not tariffs — as the biggest challenge to fair competition. He believes China’s opening up to foreign competition will not only benefit American companies, but also China itself. “The thing the U.S. should be looking for is breaking down barriers in industries where we have a competitive advantage, that can add a lot in China.”
China’s officials have also pledged to engage in sectors like finance. On Wednesday, People’s Bank of China Governor Yi Gang unveiled measures at Boao Forum for Asia to open the financial industry to more foreign investment.
Paulson also sees some hope from China’s President Xi Jinping and his “first-rate” economic advisers. He says Xi’s recent consolidation of power could help him be a more determined reformer in building China’s economy. “I do believe the team around him understands the importance of competition, understands the benefit of opening up,” said Paulson.
Krystal Hu covers technology and economy for Yahoo Finance. Follow her on Twitter.