China’s own weaknesses and troubles are lurking behind its trade war with Trump
The Mexican standoff over tariffs and immigration may have been resolved, but the global trading system remains very much in a state of anxiety as China and the United States continue to circle each other in the ring. Finance ministers from the G-20, gathering in Tokyo to prepare for the June 28-29 G-20 summit, expressed alarm at slowing international growth rates, singling out the protracted dispute as one of the primary culprits. No question the ongoing U.S.-China trade dispute isn’t helping things, nor is any quick fix likely to be the solution to what could be slower global growth and diminished trade volumes in coming years.
For decades, the global economic system looked for a second engine of growth, expecting it to come from Europe once the European Union acclimated to its newer members, common currency and deeper integration. A second engine did finally come on line, but it turned out to be a refreshed and retooled China looking to a buoyant future that would help raise all boats. Double-digit Chinese growth electrified the international trading system and set in motion breathtaking changes in the global supply chain while invigorating economies throughout the world, especially among its Asian neighbors.
It seemed, too, that enhanced Chinese diplomatic ties soon would follow. Chinese leaders seemed as indefatigable as the economy itself, fanning out throughout the world to spread the gospel of high growth and good neighborliness, without any of the busybody questions posed by U.S. and European envoys about values and human rights. Suddenly, a Chinese model was taking shape, one whose course seemed to represent the future — and not just for the Chinese.
All that is changing. China’s light industries are becoming as obsolete as those of Japan and Korea became in the 1980s and 1990s, while its growth rates no longer top the charts or support what used to be touted as a harmonious society. Political changes, including the abandonment of its clockwork-like presidential succession system, have put to question the evolution and even the direction of China’s political system.
As growth slows, China’s strategy for contending with the middle-income trap has been to try to gnaw off its civil society limb. It has tightened up a centrally administered political system that threatens to undermine ingenuity and creativity and require it to accumulate technology the old-fashioned way: by stealing it. China has become much more aggressive in its intellectual property rights acquisition, making technology transfer a condition for investment by foreign entities.
Slower growth, combined with growing financial imbalances have caused housing bubbles in China and misallocation of finances at home and abroad. Those projects abroad — notably the far-reaching (and, perhaps more accurately, far-fetched) “belt and road” initiative — have been met with skepticism among some recipient countries concerned with unsustainable and mounting debt, whose purpose seemed to be to help China manage its financial imbalances. It is not winning China friends or prestige and may yet become the world’s greatest economic boondoggle, a litany of projects the totality of whose purpose remains a mystery. Is it, as many would contend, an effort to corner the market on raw materials? Or is it, combined with growing military expenditures, an effort to dominate the world?
China’s transgressions, both home and abroad, suggest a country experiencing a growing list of weaknesses and mounting troubles. Yet in the United States, China is seen as nothing short of a colossal, perhaps existential, threat that combines means and intent to subjugate the United States.
Its size and strength has even evoked, in the opinion of some observers, a new version of “yellow peril.” Indeed, Secretary of State Mike Pompeo’s policy planning chief, Kiron Skinner, recently spoke of the challenge for the United States of dealing with a great-power rival that is not Caucasian. Whether that comment is irreverent, or just plain irrelevant, it suggests a U.S. administration wholly ill-equipped, and perhaps ill-staffed, to deal with the problem.
In fact, China’s complexity argues for a nuanced approach from the United States, one that understands the social and political dynamics within China, responds with resolve and consistency, and looks to other partners and allies to forge common approaches to the issues posed by China’s aggressiveness — a particular weakness in the current administration’s approach. But it also argues to find areas of common interests and should look to find patterns of cooperation with Beijing.
The Trump administration appears to have settled on a strategy of vigorously challenging China’s assertiveness and it is finding that, of all its foreign policies, this one is encountering the least domestic opposition. China’s detractors, right and left, are emboldened, while those advocating more engagement are exhausted. But rather than just play the victim in the ongoing trade dispute with the United States, the Chinese might want to address the problem as more structural in its relations with the U.S.
It is not just President Trump and his tariff hammer the Chinese authorities need to look at. They might consider taking a harder look at themselves.
Christopher R. Hill was U.S. ambassador in South Korea from 2004-2005, and served as assistant secretary to East Asia (2005-2009), working extensively with China on the North Korea issue. He is now a professor of diplomacy, chief adviser to the chancellor for global engagement at the University of Denver, and a nonresident senior fellow at the Carnegie Endowment for International Peace. Follow him on Twitter @ambchrishill.