Economist and Obama-Era Treasury Secretary Larry Summers offered a strong rebuttal to claims that China has been "cheating" on trade since joining the World Trade Organization in 2001, drawing praise from entrepreneur Arnaud Bertrand.
What Happened: Summers made his remarks during a discussion with historian Niall Ferguson at the University of Austin. Ferguson posited that China engages in unfair competition — including alleged subsidies, dumping, and predatory pricing — suggesting tariffs might be the solution. Summers, however, dismissed that entire framing, likening China's approach to an institution providing free tuition.
"If one goes all the way to 2001, after it was reported to the World Trade Organisation — China cheated in multiple ways," Ferguson said. "China continues to subsidize its industries in all kinds of ways. It engages in unfair competition. It does things that look to me at least like dumping, and it’s done this for a quarter of a century nearly… What do you do to stop that? …to check that kind of behavior of gaming the free trade system, if it’s not tariffs? Or is there nothing you can do?"
Summers countered by asking how many in the audience paid tuition of $10,000 or more, highlighting that the event's own institution charges no tuition. "So you have no tuition. Why do you have no tuition?" Summers said. "You have no tuition because somehow you have succeeded in mobilizing funds that have enabled you to admit students without paying. So students get the benefit of an education without paying."
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Turning to China's exports, Summers said: "So if China wants to sell us things at really low prices and the transaction is we get solar collectors that help make there be less global climate change or we get batteries that we can put in electric cars and we send them pieces of paper that we print. Think that's a good deal for us or a bad deal for us? Kind of think it's a good deal for us."
He rejected framing China's pricing strategy as "cheating," likening it instead to beneficial innovations that reduce costs for consumers. While acknowledging concerns over "predatory pricing," Summers noted that "in the entire history of economics, there have been almost no examples documented" of a genuine long-term price spike after competition is driven out.
Why It Matters: Bertrand, the former CEO of HouseTrip, seized on Summers' comments in a post on X, formerly Twitter. He applauded the economist for reframing the narrative that China's willingness to sell products at rock-bottom prices is somehow a violation of trade norms. "Who's really being cheated?" Bertrand asked, echoing Summers' contention that the U.S. benefits by obtaining affordable products while paying only with fiat currency.
Wall Street trimmed steep losses in afternoon trading Thursday, following remarks from President Donald Trump, who expressed some optimism about reaching trade agreements, particularly with China.
The seismic tariff escalation from Trump triggered a sharp downgrade to China’s growth forecasts, with Goldman Sachs now projecting a sluggish economic recovery and warning of deep labor market consequences.
Image via Shutterstock
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