It’s time to gang up on China
With a successful visit to Japan, a reprieve on auto tariffs on Europe and the suspension of steel and aluminum tariffs on Canada and Mexico, the Trump administration laid the groundwork for the proper approach toward a showdown with China: getting our friends in on the action.
The U.S.-China route of bilateral diplomacy has bogged down. The Chinese were prepared to make a trade deal but refused to:
- let the U.S. remain the unilateral judge of Chinese compliance;
- abandon their internet censorship; or
- put their president, Xi Jinping, in a weak position at an uncertain summit because they remember what happened to North Korean leader Kim Jong Un: He was left standing at the altar in Hanoi.
The outlines of the proposed deal were reminiscent of the deals some of the same U.S. team made with Japan in the 1980s: a big buying mission, auto and other sector openings and promises of structural reform, i.e., a minimalist deal.
Outside of China, our Allies remain unconvinced of the threat from Huawei technology but are concerned about the same issues we have with Chinese trade: the power of state-owned enterprises and the theft of technology.
French President Emmanuel Macron and German Chancellor Angela Merkel, much to their chagrin, were unable to organize concerted European pressure on China when President Xi Jinping visited last spring. And, in mid-May, at a meeting in Paris, the Europeans pressed the U.S. to join them in a concerted international effort.
In sum, fighting alone hasn’t gotten us very far except for piling pressure on China while our friends yearn for U.S. leadership.
For some, the impasse seems just fine. Indeed, in both Beijing and Washington, there are two camps: trade hawks and strategic hawks. Both President Xi and President Trump and their negotiators would like to show they can cut the really big deal.
However, as U.S. negotiators add tariffs and sanctions, they are abetted by hawks pushing to cut China off from U.S. technology, pressure firms to move their supply chains elsewhere and keep Chinese investment away from U.S. soil. In essence, these hawks want to build a wall around China.
On the other side of the Pacific, in China, some argue — as the People’s Daily did last fall — that if China is to find its space in the world, it will inevitably have to confront the U.S.
If this moment has come, they say, then take the temporary setback, develop China’s own chips, disks and operating systems, and relaunch a stronger China — what President Xi recently called “the new long march” referring to the travails of the party and his father in the 1930s.
Neither side is as strong as it believes. China’s rude awakening occurred when the U.S. cut off telecom firm ZTE from the Android operating system and later repeated the blow on Huawei.
Overall, however, China relies less on imports to produce its exports than in the past; the percentage peaked at 36 percent in 2007 and has gone down below 20 percent since then.
The U.S. market, albeit large, has also fallen in importance as China opened up new markets in the developing world during our financial crisis.
What’s more, the U.S. doesn’t dominate global commerce as it did in the past: U.S. output as a percentage of world output peaked at about 40 percent after World War Two. Now, with a rapidly emerging global middle class, it has declined below 20 percent.
Yet, one lesson from the skirmishes so far is how incredibly addicted we are to each other: China to iPhones and U.S. technology and firms to the consumers and profits in China.
Will we end up in a divided world with a China zone and a U.S. zone? What about those in the middle? Without positive U.S. leadership, our traditional friends in Europe and Asia stand perplexed in the middle.
India, Indonesia, Southeast Asia, Africa and much of Latin American will wait and see, perhaps trying to choose “both.” For our part, it is becoming increasingly clear that pushing “America First” leaves America alone.
Is there another path? Yes, China can be cornered. It’s time to round up the posse and ride. With some U.S. leadership at the World Trade Organization, World Bank, Asian Development Bank and elsewhere, we can put in place international rules, along with enforcement mechanisms, on all the major issues.
For example, with U.S. diplomatic leadership, we can:
- evaluate the subsidies and rebalance the playing field against state enterprises;
- establish groups to blacklist firms that steal technology;
- bring pressures on China to protect proprietary intellectual property; and
- deploy teams to help other countries evaluate Chinese offers objectively against the standards of procurement, transparency and bribery codes.
In sum, if we deal with China’s economic enticements by leading an international effort on standards, we will find many partners and tie China into a U.S.-led international system.
The best diplomacy changes the environment the other side must deal with, even as it seeks a deal. If we can wire the world our way, China will have to negotiate to fit in. Dividing the world into the U.S. sphere and the Chinese sphere leaves us as isolated as them.
We have a clear choice with China on trade as on other issues: Either America leads with diplomacy or America will find itself a prophet without followers. Which way will we lead?
Richard Boucher teaches diplomacy at Brown University’s Watson Institute. He is a career ambassador, former spokesman and China-hand for the State Department. He is the former deputy secretary general at the Organization of Economic Cooperation and Development.