The U.S.-China trade war

Washington and Bejiing are drifting into a trade war, one that has its peculiar aspects as compared with such 19th and 20th century events.

It is being minimized in importance because of the blind spots both countries have for one another. The best explanation is that neither has an adequate appreciation of the other’s quite different environment.

The U.S. and the forces of freedom did win the Cold War, despite an often vast ignorance of Soviet decision-making and its leadership. But Beijing is cavorting in a $360-billion trade surplus with the United States while extorting technology from American companies and seducing high-tech giants like Apple and Google.

It is not only insulting but damaging. Sniveling on China’s behalf when their sales in that country are reduced, the leading G-77 are often Beijing’s sponsors in international disputes. The Chinese have the temerity to make requests for relief from the economically most advanced countries for their pollution of the world environment although China is the world’s greatest polluter.

When Apple Inc. said China’s slowing economy contributed to its late-year sales slump, the news rattled the stocks of other major U.S. companies with big operations in the world’s second-largest economy. Now, as U.S. companies report their quarterly earnings, China’s impact will be revealed. The amount of damage is likely to depend on such factors as who the company’s customers are and how much competition it faces in China. The amount of damage will depend on such factors as who the company’s customers are and how much competition it faces in China.

On the one hand, the Trump administration has been pretty clear about its view of China: A 2017 national security strategy document called China a “revisionist” power, attempting to reorder international politics to suit its interests.

That’s a pretty succinct way of describing Beijing’s military buildup, its attempts to undermine American influence and power, its retaliations against American allies such as Canada, and its economic actions.

The U.S. economy and national security have been threatened by Beijing’s strategy since President Xi Jinping took office in 2012 adopting what translates as “civil-military fusion”. Chinese and foreign “civilian” companies serve as de facto suppliers for the Chinese military’s technological-industrial base.

Residents and visitors are subject to constant surveillance, reflected in credit scores affecting everything from their home purchases to job opportunities.

Ironically, these forms of social control often use technology developed by Western companies.

But even if American exports to China fell by half, it would be the equivalent of less than one-half of 1 percent of U.S. gross domestic product. There are plenty of countries that can substitute for China-based production, none of them strategic rivals and trade predators. Previous efforts to assert America’s influence against China, such as the discarded Trans-Pacific Partnership, did not push back effectively on Chinese economic aggression. Working with allies to directly address China’s malfeasance would.

All this means putting China at the top of American international economic priorities and keeping it there for years, without overstating or overreacting to trade disputes with our allies. The administration must not be distracted by the next round of Beijing’s false promises.

Protecting innovation from Chinese attack makes the United States stronger. Hindering the Chinese security apparatus makes external aggression and internal repression more costly for Beijing. China is our only major trading partner that is also a strategic rival, and we should treat it differently from friendly countries with whom we have disputes.

If Washington wants the global free market to work, it must intervene to blunt Beijing’s belligerence.


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