This is a guest post from law professor David Trubek:
With a meeting between Presidents Trump and Xi at the G-20 in Buenos Aires about to occur, many hope for a truce in the trade war and a deal that will benefit both countries. But that will not happen if some in the U.S. Administration have their way. For them, higher tariffs are not a ploy to get a better deal: they are tools to weaken China.
That is the viewpoint of an alliance of trade nationalists and national security hawks who see the trade war as a zero sum struggle for global predominance and whose goal is halting China’s rise as a world power. This is not “Let’s do a deal,” it is Stop China. The trade nationalists want to move production back to the US, make it harder for the Chinese to compete with US-based high tech firms, and divert China-based supply chains to other countries. The defense hawks want to limit China’s influence with our allies and ensure that China does not secure advanced war-making technologies. All want to stop China from being the world’s largest economy. Some claim this will promote liberal economic, political and cultural values.
The President of the United States seems to side with the Stop China faction. Referring to measures taken to punish China, Trump said:
“…China has come down tremendously. Tremendously. China would have superseded us in two years as an economic power; now, they’re not even close.”
He went on to state, erroneously, that he forced China to abandon its ambitious “Made in China 2025” plan to become a world leader in high-tech:
“China got rid of their ‘China ’25’ because I found it very insulting…. ‘China ’25’ means, in 2025, they’re going to take over, economically, the world. I said, That’s not happening.”
Officially, our policy is to impose tariffs unless China ends certain abuses. There are real issues that need to be addressed and distortions to be eliminated. If the war were just about reducing the bilateral trade balance, getting more access to Chinese markets, and limiting IP piracy, there is a deal that could and should be struck. But the hawks want China to fundamentally alter its system of economic organization, abandon strategies that have benefited millions, and give up its ambition to become a world leader in high tech industries.
China cannot and will not accept those changes. Xi cannot agree to slow growth, change China’s economic model, or stop building world class industries. These are at the core of his and the entire regimes’ legitimacy. The memory of the Opium Wars and other kinds of foreign imposition is too strong to allow the Xi regime to abandon core policies under pressure from the West. They are already fighting back.
The Stop China strategy is both wrong and futile. It is wrong because China should be allowed to maintain an economic strategy that has achieved miracles for its people. It is futile because nothing we do can stop China from eventually becoming the world’s largest economy. And if this were really about preserving or enhancing liberalism, nothing is more likely to harden illiberal tendencies in China than a long-drawn out fight with the West.
I want us to get a better deal for the US. I know there is a win-win deal to be had. But I am appalled that our goal may be not to help US citizens but harm the Chinese. If the Stop China people control US trade policy, they could maintain high tariffs indefinitely to forestall Chinese growth. That would disrupt the world economy and harm our own businesses.
Wall Street has figured that out and started talking directly to Beijing. They must be looking for a deal the Chinese would accept and the Trump Administration cannot turn down. This brought an amazing rebuke from Peter Navarro the Lord High Executioner of the Stop China movement: he told Wall Street to keep hands off trade policy. Think of it: a Republican Administration telling the US business community to keep out of economic policy making.
There are other voices encouraging a return to “Let’s do a deal”: I hope they prevail as we come down to the crunch in Buenos Aires. If not, there will be no truce when Trump meets Xi and we will all lose politically, economically, and morally.
