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China and America Are Heading Toward Divorce
For 40 years the two countries had an unconscious economic coupling.
My favorite story in John Bolton’s book about the Trump Fun House — sorry, White House — was that President Trump appealed to China’s leader to buy more U.S. agricultural products to boost Trump’s farm vote and his re-election.
Donald: Stop begging. Both Xi Jinping and Vladimir Putin have decided to vote for you. Don’t worry!
They know that as long as you’re president, America will be in turmoil. For Xi, that means we’re a less formidable economic rival, and for Vlad, that means we’re a less attractive democratic model for his people. They also both know that as long as you’re president the U.S. will never be able to galvanize a global coalition of allies against them, which is what China fears most on trade, human rights and Covid-19 and Russia on Ukraine and Syria.
Don’t take it from me. Here’s what Zhou Xiaoming, a former Chinese trade negotiator and deputy representative in Geneva, told Bloomberg’s Peter Martin: “If Biden is elected, I think this could be more dangerous for China, because he will work with allies to target China, whereas Trump is destroying U.S. alliances.”
Chinese officials, Martin reported, see a unified front on trade or human rights by the U.S. and its allies as “Washington’s greatest asset for checking China’s widening influence,” and Trump’s behavior ensures that will never come about.
But while China may think it has nothing to fear and much to gain from a Trump victory over Joe Biden, the real U.S.-China story should be cause for alarm in Beijing.
The real story is that China’s standing in America today is lower than at any time since Tiananmen Square in 1989. The real story is that if China was to buy a few more beans and Boeings from America, that would not fix Beijing’s problems here. The real question the Chinese should be asking themselves is not who will be America’s next president, but rather: “Who in China lost America?”
Because the real story is that the U.S. and China are heading for a divorce.
The divorce papers will just say the cause was “irreconcilable differences.” But Mom and Dad know better. They are getting divorced, after 40 years of being one couple, two systems, because China badly overreached and America badly underperformed.
Love it or hate it, the U.S.-China partnership forged between 1979 and 2019 delivered a lot of prosperity to a lot of people and a lot of relative peace to the world — and, baby, we will miss it when it’s gone.
It was a period of unconscious economic coupling. Steadily over this era, and then rapidly after China joined the World Trade Organization in 2001, any America entrepreneur could wake up and say, “I want to purchase from this Chinese company” or “I want to move this supply chain to China.” Any U.S. university could say, “I want to open a campus in China,” and any U.S. tech company could say, “I want to open a research lab in China or hire a Chinese scientist.”
And any Chinese student could say, “I want to study in America,” and any Chinese company that qualified could say, “I want to list on the New York Stock Exchange” or “invest in or buy an American company.”
These four decades of unconscious coupling hurt some workers, benefited many others and especially benefited consumers; it also took the edge off the natural rivalry between the world’s most powerful country and the most important rising power and enabled them to collaborate on global problems, like climate change and the post-2008 economic crisis.
This 40 years of unconscious coupling is over. We will still trade, still engage diplomatically; tourists will still come and go; U.S. businesses will still look to operate in the giant China market, because they must to survive.
But the unconscious coupling is over. Henceforth, it will be more hedged, opportunities will be more restricted and the relationship will be full of a lot more conscious suspicion, pressures for self-sufficiency and fear that a rupture could happen at any time.
Compared with the last 40 years, it will feel like a divorce.
“Both sides are saying, ‘We’ve had enough of you,” remarked Jim McGregor, chairman of APCO Worldwide for Greater China. And as Trump himself put it in a tweet last week, the U.S. has the option “of a complete decoupling from China.”
But both sides are not equally to blame. The Xi era in U.S.-China relations, which began in 2012, has led the relationship steadily downhill. China went too far on a broad range of issues.
Start with business. For many years U.S. companies thought they had enough market share inside China that they would tolerate the stealing of intellectual property and other trade abuses China engaged in. But in the last decade, China started to overreach, and the American Chamber of Commerce in China began to complain louder and louder. Gradually, many in the U.S. business community, which was a key buffer in the relationship, began to endorse Donald Trump’s hard-line approach (although they don’t like paying tariffs).
Since Xi took power and made himself effectively president for life and tightened the Communist Party’s control over all matters, U.S. journalists working in China have had their access sharply curtailed; China has become more aggressive in projecting its power into the South China Sea; it’s become more fixated on subsidizing its high-tech start-ups to dominate key industries by 2025; it is imposing a new national security law to curtail longstanding freedoms in Hong Kong; it’s stepped up its bullying of Taiwan, taken a very aggressive approach toward India and intensified its internment of Uighur Muslims in Xinjiang; it’s jailed two innocent Canadians to swap for a detained Chinese businesswoman; and it even hammered countries that dared to ask for an independent inquiry into how the coronavirus emerged in Wuhan.
After Australia’s prime minister called for such an investigation in April, China’s ambassador to Australia brazenly threatened economic retaliation, and a few weeks later China cut off beef and barley imports from Australian companies, citing bogus health and trade violations.
That is the kind of crude bullying that has helped to strip China of virtually every ally it had in Washington — allies for a policy that basically said, “We have different systems, but let’s build bridges with China where possible, engage where it is mutually beneficial and draw redlines where necessary.”
That balanced policy approach always had to contain serious tensions, ugliness and disagreements on issues — but in the end it delivered enough mutual benefit to be sustained for 40 years. That balance is now off as far as many Americans are concerned. I am one of them.
As Orville Schell, one of the most sensible advocates of this balanced approach, wrote in an essay a few weeks ago on TheWireChina.com: “Today, as the U.S. faces its most adversarial state with the People’s Republic of China in years, the always fragile policy framework of engagement feels like a burnt-out case. … A recent Pew poll shows that only 26 percent of Americans view China favorably, the lowest percentage since its surveys began in 2005.”
But if China has increasingly overreached, America has increasingly underperformed.
It is not just that China reportedly has fewer than 5,000 Covid-19 deaths and America has over 120,000 — and the virus started there. It is not just that it takes about 22 hours on Amtrak to go from New York to Chicago, while it takes 4.5 hours to take the bullet train from Beijing to Shanghai, slightly farther apart. It’s not just that the pandemic has accelerated China’s transformation to a cashless, digital society.
It’s that we have reduced investments in the true sources of our strength — infrastructure, education, government-funded scientific research, immigration and the right rules to incentivize productive investment and prevent excessive risk-taking. And we have stopped leveraging our greatest advantage over China — that we have allies who share our values and China only has customers who fear its wrath.
If we got together with our allies, we could collectively influence China to accept new rules on trade and Covid-19 and a range of other issues. But Trump refused to do so, making everything a bilateral deal or a fight with Xi. So now China is offering sweetheart deals to U.S. and other foreign companies to come into or stay in China, and its market is now so big, few companies can resist.
Summing up the relationship today, McGregor, of APCO Worldwide, noted: “I don’t know if the Chinese are taking America seriously anymore. They are happy to just let us keep damaging ourselves. We have to wake up and grow up” — and get our own act and allies together. China respects one thing only: leverage. Today, we have too little and China has too much.
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