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Breaking the China: Does it make sense?

Breaking the China: Does it make sense?
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Attacking China is the order of the day. Many experts have called for decoupling the U.S. and Chinese economies, and the Trump campaign has made it clear that it will demonize China as the enemy in the president’s quest for re-election. Administration spokesmen and former officials leave no doubt that China is the main enemy. President Trump even says that China knowingly spread the coronavirus. Because the pandemic began in China and China deliberately hid its lethality from the entire world, it must be held to account and not just by the U.S. 

But the idea that we and our allies can decouple from China easily and at little cost requires much more thought. 

First, whatever experts might advocate, whenever the administration incites such discussions it actually advocates its broader policy of economic nationalism or autarky.  Autarky means throwing up tariff walls that block trade and investment not only with China but also with other states. Thus, decoupling from China is only the first shot in a campaign to build tariff barriers between the U.S. and the world. 

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Given the deep integration of global supply chains, this policy is utterly contrary to American interests. Breaking economic cooperation, not only with China but also with our allies, helped aggravate the current crisis.

The administration’s inability to get a grip on the pandemic was made worse by trade barriers and antagonism with other states that block them from selling us needed medical supplies. Autarky raises the cost of production, protects inefficient and uncompetitive producers, deprives us of continuing technological advances and intensifies international tensions. Advocates of autarky or economic nationalism are already advocating massive taxpayer bailouts to decouple from China, which would only impose more burdens on workers, consumers and the deficit.

Autarky transfers resources from efficient to inefficient non-competitive producers and selfish interest groups. Those interest groups then become a fetter on further economic development, injuring the interests of workers, consumers and innovators. Moreover, autarky will cost us more markets that will go to China.

Therefore, we must build more redundancy into our networks with our allies. Strategic stockpiles may be desirable in key areas.  But we must also find ways to settle trade disputes, including through the World Trade Organization. Further, we must build international redundancy into the health care sector so when the next crisis happens, we will have more supplies to fight it. 

A sound economic strategy not only entails fundamental domestic reforms in education, finance and healthcare, it also means creating free trade associations with our allies. One of this administration’s greatest mistakes was rejecting the Trans-Pacific Partnership (TPP) in 2017. The TPP would have fostered greater integration between the U.S. and all of its Asian allies and other key states such as India, but not China. It could have created the basis for a massive expansion of trade and investment here and among allies and friendly states. Certainly, it could have alleviated the terrible supply shortages here due to lack of planning, foresight and disregard of the multiple warnings of impending disaster that have characterized our response.

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Instead, one of the administration’s hallmarks has been the endless launching of unnecessary trade wars on allies and adversaries alike. These wars have incurred few if any strategic gains but have registered significant losses. Our Asian and European allies have lost trust in the U.S., and our alliances are probably weaker than ever before. 

Therefore, these attacks on globalization are economically and politically destructive to America’s national interests. As former U.S. Trade Representative Robert Zoellick has stated, we tried economic nationalism before and it helped lead to the Great Depression and World War II.

While globalization has not failed, it is fragile. Removing production chains from China would be a difficult, costly enterprise at best, even where necessary. It only works if we improve rather than destroy globalization.

Finally, apart from the harmful domestic and global consequences of autarky, there is a striking irony here. In November, 2019, just before this pandemic, the Washington Post reported that China preferred President Trump to all the other presidential candidates because he’s easy to read, has undermined our alliances, and, as one well-connected Chinese source said, because “as long as we have money we can buy him.” 

Since there is no sign that Beijing’s assessment has changed, it is clear that autarky is not in America’s or Americans’ interest. Following that course would aggravate the current crisis, not mitigate its impact. And that makes no sense.

Stephen Blank, Ph.D., is a former professor of Russian National Security Studies and National Security Affairs at the Strategic Studies Institute of the U.S. Army War College. He is also a former MacArthur fellow at the U.S. Army War College. Blank is an independent consultant focused on the geopolitics and geostrategy of the former Soviet Union, Russia and Eurasia.