Implications of the Chinese Response to U.S. Business Strategy: External Internal Rival Nexus in International Trade Policy Making

This paper explores the emerging state-business alliance and its impact on international trade policy making through interplays between China and the United States. The paper examines the dispute over intellectual property rights between the two economies based on Putnam's twolevel game approach. It analyzes the policy option chosen by China, and its impact on Washington's shift of policy preferences in result of the rival competition between the Boeing Corporation and the Microsoft. The findings suggest that (1) the intercompany contest drives a politically rival market,where the government sides with one state-business alliance, other industries are forced out of this contest in influencing trade policy preference; (2) rival states might acknowledge and utilize such competition to press the target state to change its policy priority, and (3) companies tend to compete to form such state-business alliances for creating favorable conditions in international trade.