Remarks to the National Committee for U.S.-China Relations
Three days ago, we celebrated the fortieth anniversary of Jimmy Carter’s and Deng Xiaoping’s politically courageous decision to normalize relations between the United States and the People’s Republic of China. I have been involved in our relations with China in one way or another for fifty years. Thinking about how China and the world as well as U.S. relations with both have changed over that period, I am struck by many ironies.
The United States sought to change China’s geopolitical position, not China’s socioeconomic system. Yet our opening to China informed and enabled major changes in its domestic political economy.
When Washington first reached out to the People’s Republic, it saw China as isolated, vulnerable, and unstable. We now confront a globally connected and relatively wealthy China with very strong capitalist characteristics. Our concerns about Chinese weakness have given way to worries that China may have become a formidable – perhaps overwhelming – geoeconomic competitor and that it might displace our influence not just in its region but on the Eurasian landmass and adjacent areas.
When we Americans rediscovered China after decades of enmity and ostracism, we easily reverted to an updated version of the paternalistic missionary mentality we had exhibited in the pre-Communist era, implicitly positioning ourselves as the guardians and tutors of the Chinese. Now that they have graduated from our tutelage and are themselves becoming a teacher to the world, we are uncertain how to deal with them. Our opening to China helped it to study, adopt, and adapt the world’s best practices, strengthen itself, and enter a long period of political-economic stability. The world is more prosperous and stable for that. But both American hegemony and confidence in our ability to compete are receding.
We sought to counter the Soviet Union by enlisting China in containing it. But, with China as our partner, we ended up not just containing but bankrupting and destroying the USSR. (We had quite forgotten that the premise of containment was that, left to itself, the Soviet system would collapse of its own defects. Four decades later, when – as George Kennan had predicted in arguing for containment – the Soviet system finally succumbed to its infirmities, we were astonished.) Our attempt to use China to rebalance global geopolitics had vastly exceeded our expectations and altered them fundamentally.
In the 20th century, we wanted China to be able to defend itself against its aggressive neighbors, first Japan, then the USSR. But, when it became able to do so, it also became able to defend itself against us. We are not coping well with China’s contributions to the inevitable loss of our seven-decade-long military primacy in East Asia and the Pacific. Instead of finding ways to enlist Chinese power as much as possible in support of our own, we are treating Beijing as a malicious peer competitor and ramping up military confrontation with it in support of a crumbling and likely unsustainable status quo.
Americans never imagined that our outreach to China could transform the world’s ideological dynamics as well as its geopolitical geometry. The architects of our China policy were not moral crusaders. Nixon and Kissinger sought to change China’s foreign policy, not its regime or its political system. With the sole exception of the first year of the Clinton administration, the impulse to reengineer China’s domestic order was a popular hope born of ideological conviction that never became policy. And when it briefly did become policy, it failed decisively. Americans’ concern for human rights did not disappear but the policy of aggressively bargaining for them was abandoned, leaving only lofty talk and castigation behind it.
The Clinton policy was driven by critics who had consistently argued that the U.S. government should seek China’s democratization as the price of cooperation with it. With the Cold War over, they thought it high time to insist that China change its politics. Now the very same critics and their intellectual kin proclaim U.S. engagement with China to have failed because it did not achieve the policy objectives they espoused but were unable to impose on successive American governments.
It is true that we did not Americanize China. [In 1940, Senator Kenneth Wherry famously declared that “with God’s help, we will lift Shanghai up, ever up, until it is just like Kansas City.”] Shanghai is not yet “just like Kansas City.” And it is true that Chinese realities have not followed the course predicted by liberal political theory. (One wonders whether it is the theory, not our relationship with China, that needs reconsideration.) As a result of internal changes in China as well as in the international environment, democracy may no longer seem destined to triumph over all other political dispensations. Still, for the first time, it now faces no global ideological challenge. We are in a great power competition that will be decided by socioeconomic performance, not political pretense or presumed ideological virtue. The question is not whether our system is right but whether it enables us to compete with the very competitive variant China has evolved.
Some Americans nostalgic for the simplicities of the Cold War suffer from enemy deprivation syndrome. They are in earnest search of a hostile ideology against which to orient themselves and see China as the answer to their distress. After all, when we opened ourselves to China, Beijing advocated the worldwide overthrow of capitalism, the destruction of global multilateral institutions, and the replacement of the American-sponsored liberal world order with Marxist-Leninist hegemony. But it has been more than four decades since China offered such a challenge. Our policies toward China have played a major role in creating a world that prefers muddling through to anti-American ideological evangelism. That’s better for us, even if some are not happy about it.
Once President Clinton’s effort to compel China to adopt Western standards of human rights had definitively failed, his administration turned to an effort to incorporate China fully into the American-led world order. That effort succeeded. China is now a valued member of the international community and an active participant in its established systems of governance, including all the Bretton Woods legacy institutions. It has expanded the world order Americans created, not contracted or eroded it, by adding institutions like the Asian Infrastructure Investment Bank, the New Bank, and other development funds. These organizations and their capital parallel, supplement, complement, and cooperate with the World Bank and regional development banks. They do not compete with them.
From the founding of our republic two hundred and more years ago, we Americans have seen China as a huge potential export market for our goods and services. It is now finally on the way to becoming the world’s largest consumer society. And as it has prospered, China has become our fastest growing export market. But facts and long-term considerations be damned. It is too late to head off the populist goon squad.
We began our relationship with the People’s Republic with a trade surplus. That unexpectedly evolved into a massive trade deficit as our companies came to see China as an economical source of manufactures for export to both the United States and other countries. This has kept consumer prices low and mitigated the increasing inequality of income distribution in our country.
We are now in a trade war that imperils American consumers and both Chinese and American manufacturers. As our president is fond of saying, we will see how that works out. My guess is that we will regret replacing globalization with mercantilism and orderly dispute resolution with winner-take-all bilateral bullying.
Mercantilism consists of protectionist policies that aim at government management of trade to maximize exports and minimize imports through high tariffs and import quotas. Mercantilism seeks self-sufficiency and domestic production at the expense of interdependence and comparative advantage. This was China’s policy under Mao Zedong. It is now America’s policy under Donald Trump. It did not work for China under Mao. Will it work for America under Trump? I see no reason to believe it will.
Global supply chains achieve efficiencies by using comparative advantage to create transnational assembly lines. Washington is now employing tariffs and quotas to disrupt and destroy these. As the U.S. closes its market, China is reaffirming its commitment to an expanded role in its economy for imports.
China has allowed itself to become dependent on America for a significant part of its food, the top concern of all Chinese governments throughout history. It relies on high tech U.S. inputs for its most advanced industries. China has been by far the largest market for U.S. microchips. It is the only large market outside North America where U.S. car companies have gained significant market share. And so forth.
The Trump trade war, far from promoting further market opening by China and greater exports from the United States, is providing the Chinese with compelling arguments to eliminate their dependence on American agricultural and industrial products. Can services – in which we have enjoyed a rising surplus – be far behind?
Seven decades ago, the “greatest generation” of Americans led the way in creating the multilateral institutions that regulate the liberal world order in which we and China have since prospered. Perhaps the oddest thing in this long recitation of ironies is that it is the United States, not China, that is now attempting to withdraw from that order, sabotaging it as we do so.
It is the United States, not China, that is attempting to overthrow multilateralism internationally and replace it with unilateralism. It is the United States, not China, that is refusing to ratify international agreements and withdrawing from or abrogating those it finds inconvenient or burdensome. It is the United States, not China, that exhibits open contempt for the sovereignty of other nations by invading, occupying, employing covert action, and making economic war on them to engineer regime change. It is the United States, not China, that is a cobelligerent in an expanding list of horrifyingly destructive foreign wars.