Tuesday, May 28, 2019

China Trade War

Many people prefer to believe that the world is entering a post-apocalyptic stage, that the peoples of the earth will soon co-exist in harmony with one another, and achieve a general prosperity and enlightenment. 

Science and technology have wrought enormous changes over the last three centuries, completely transforming life on the planet. The pace of this change is increasing, and it is difficult to know how these changes--and those to come--will affect the nature of our existence. 

Human society, which subsisted for millennia against the challenges of survival, has overcome many of the obstacles placed before it, and seems on the verge of complete domination of the environment. 

Marxist economics posited a violent transition from industrial commodity capitalism to top-down planned economy in which the hierarchy of labor value would be dictated--hardly a "withering away" of the state aparatus. Post-Mao China's hybridized version of an authoritarian state-sponsored entrepreneurism, fueled by technology theft and unfriendly corporate piracy, caught the West by surprise. 

Since the rise of nationalism over the last 400 years, we've seen an entrenchment of nativist and colonial policies, which show no signs now of "withering away" either. China's selfish trade and territorial policies are another proof, if one were needed, of the continuing appeal of self-interested diplomatic and economic postures in an increasingly interconnected world. 

Despite temporary periods of relative calm, nations habitually reassert their separatist aims. Democracy, after all, is about the will--not "the people"--but of the enfranchised citizens of separate nations, whose first priority has always been, and will probably always be, self-interest according to national borders and identifies. 

What nation would willingly sacrifice the welfare and benefits of its citizens to those of another power, another interest? 

America's trade relationship with the People's Republic of China
has been characterized over the last 30 years by a glaring imbalance. This is expressed as an enormous deficit in net parallel purchases--a "trade deficit." This deficit has ballooned to historic proportions as China has maintained a steadily restrictive and exploitative position with respect to tariffs and access to markets. It has in turn fueled one of the great economic booms in all of history, lifting China out of the doldrums and into second place, behind the U.S. This could not have happened without the willing participation of its trading partners, particularly the U.S.  

Not satisfied with being the world leader in manufacturing, China now wants to dominate the technology sector. Unwilling to develop its own educational and scientific research and development, it has chosen to appropriate ("steal") the technology of older, more mature rival economies, then outproduce and outsell ("flood markets") them.  

They have been entirely successful, in large measure because the Chinese government has worked hand-in-glove with its own industries--manipulating currencies, restricting foreign investment and control, using trade as an aggressive form of foreign policy. 

An interesting broadside essay on China's trade behavior--How China's Economic Aggression Threatens the Technologies and Intellectual Property of the United States and the World is here--which is heavily footnoted and quite persuasive in its essential thrust.  

I would recommend further reading. There is nearly universal sentiment regarding the threats that China now poses to the U.S. and other Western powers. China's authoritarian power structure has shown no signs of moderation, and appears committed to bludgeoning its rivals into submission, one way or another. Though its tools may not now include actual military means, its ability to do so, given its fast-accruing wealth, is now major concern throughout Asia.    

For centuries, European powers ruthlessly exploited Asian territories, so Beijing well understands the subservient colonial position. Meanwhile, as the rest of the "civilized world" appears to have abandoned the colonial strategy, China has adopted it. 

Since the rise of nationalism, nations have contended for leverage and advantage over neighbors. Concepts such as "detente" or "peaceful coexistence" or "mutually assured destruction" or "coordinated resistance" now seem quaintly old-fashioned in the 21st Century dog-eat-dog world of trade. 

We are now clearly dealing with an opponent who regards ordinary courtesy and the rule of law as minor obstacles. Personal and political freedom have been tossed aside, in favor of single-minded pursuit of economic conquest. Like traditional dictatorial regimes, they only understand, and respond to, power. They may pay phony lip-service to "negotiation" but in the end they can be counted on to seek total victory in every encounter--compromise isn't a part of their vocabulary. 

President Trump has been criticized for embarking on an ill-timed and ill-conceived "trade war" with China. While this may indeed be one aspect of the President "playing to his base" it does not suggest that the factual motivation is without merit. Previous administrations have sought, politely, to persuade China to loosen its restrictions, quit manipulating currency, refrain from unfriendly practices (like "dumping"), etc. This approach has had no effect whatsoever. 

On an even playing field, the U.S. economy is fully capable of standing toe to toe with any competitor in the world. But China refuses to play by the rules. It's high time we said "enough is enough" and made them retreat a step or two. 

Ultimately, there may be no future in which nations can agree to share wealth and opportunity. It seems endemic to nation states, that they will always seek the high ground in any confrontation. The days of regarding China charitably--as being in need of understanding and assistance--are long over. We are dealing with a nation state that displays all the worst aspects of fascistic, communistic and colonial regimes--a new hybrid state-run gangster capitalism. 

No comments: