A Beijing professor says a catastrophic outcome in the China-US trade relationship is unlikely, so long as the US faces facts. They must recognise that trying to contain China economically will not solve their problems at home

A Beijing professor says a catastrophic outcome in the China-US trade relationship is unlikely, so long as the US faces facts. They must recognise that trying to contain China economically will not solve their problems at home

By P.H. Yu*

The agreement in Buenos Aires last December between US President Donald Trump and his Chinese counterpart, Xi Jinping, led many to assume that the two countries’ trade war would soon be over. Although such optimism is misplaced, so are fears of a global economic meltdown caused by a rupture in US-China relations.

Frequent bilateral skirmishes will no doubt continue, as we saw with the arrest in early December of Huawei CFO Meng Wanzhou. But for all the economic rivalry and political disagreement between the United States and China, a catastrophic outcome is unlikely, so long as the US faces reality in three ways.

For starters, US policymakers need to accept the “new normal” of a China that boasts the world’s largest GDP (in purchasing-power parity terms). Just as the US was the largest economy in the twentieth century, China will be in the twenty-first. But under any scenario, America will of course remain a major economic power.

Second, the US must acknowledge the need for structural economic reforms at home, just as China did four decades ago, albeit with a very different focus and trajectory. Rather than blaming its huge trade deficit on other countries’ supposedly unfair trade practices, the US should consider its own unsustainable economic policies, deteriorating industrial capacity, and insufficient investment in infrastructure, education, and training.

If US policymakers keep focusing on pleasing Wall Street, big business, and neoliberal economists, then the country’s economic performance will suffer and wealth inequalities among Americans will continue to widen. This in turn will raise the risk of further social instability, extremism, and populism. US elites cannot afford to ignore obvious warning signs in the same way they overlooked the subprime mortgage bubble that triggered the 2008 financial crisis.

Finally, America needs a better understanding of China’s geopolitical outlook and intentions – an area where incorrect assessments may lead to unnecessary conflict. For example, although Western theories of international relations predict that China’s economic strength is bound to turn it into a dominant global power, the country’s history suggests otherwise.

China has never pursued aggressive geographical expansion, even when it had the power to do so. This is consistent with an important classical teaching for Chinese emperors known as the Doctrine of Mean, which holds that attempts to seek world domination always lead to national destruction and bring misfortune to the people.

In addition, China was severely affected by the imperialism and colonialism of other powers in the not-too-distant past and has no wish to repeat the experience. Significantly, China has refrained from interfering in other countries’ internal politics during the recent build-up of its defense capabilities.

Many global leaders, particularly Trump and Russian President Vladimir Putin, seem to believe military power and strategic coercion are the best ways to measure competitiveness and guarantee security. But military and political domination backed by force or bullying are no longer critical or even relevant in international relations.

What China wants is a fair and open global system in which all can participate equitably and that encourages economic cooperation. It wants to continue raising its people’s wellbeing and believes that world peace can best be sustained when all countries are economically successful. And of course, as one of the leading economies, China itself stands to benefit greatly from a peaceful world.

But China’s leaders face serious challenges of their own in maintaining the country’s economic expansion. Although domestic firms are competitive in certain traditional manufacturing sectors, with growing potential in many others, China relies heavily on imports of sophisticated goods – for example, medical supplies – from the West. And last year’s US ban on the sale of advanced semiconductor chips to telecom company ZTE, after the latter violated US export rules, clearly demonstrated China’s technological inadequacy. Moreover, China must create enough jobs for the world’s largest working population, including eight million university graduates each year, even as it must also manage the burdens of an aging society.

In these testing times, an ideological battle over which economic development model is superior would benefit no one. As the world’s two largest economies, the US and China have a special responsibility to manage a peaceful transition to a new multipolar international order. They will do this most effectively by cooperating and jointly managing the challenges that will inevitably arise.

For the US, this means realising that trying to defeat or contain China economically will not solve its problems at home. America’s national interests would be far better served by facing reality and accommodating China’s rise.


P.H. Yu is Chairman of the Council of the Institute of New Structural Economics at Peking University. Copyright: Project Syndicate, 2019, and published here with permission.

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15 Comments

17
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Thanks interest.co.nz. It's always more convenient to get Chinese propaganda right here under one roof than to seek out party sources directly.

This is an extract from president Xi's speech. ""‘The fact that Taiwan is a part of China, that both sides of the strait belong to one China, is something that nobody, with any amount of power, can change. The compatriots on both sides of the strait are all Chinese, blood is thicker than water, their natural desire to cooperate and common ethnic identity is something that nobody, with any amount of power, can change.’"" Now translate that to say UK colonisation of NZ and have it as part of a public speech by Jacinda and see how she would be torn to pieces as a xenophobic racist. The only significant difference is the greater survival of the race of origin; Taiwanese indigenous peoples are 2.3% of the population and the rest are Han Chinese.

He is half right, Taiwan is legally a part of the Republic of China, as is the entire Chinese mainland. In reality the Republic of China only controls Taiwan and a few small Fujianese islands. The rest is occupied by the reprehensible communist government setting up concentration camps that we're all too familiar with.

Yes. A very dull propaganda piece. Ok as a weekend filler.
The peasants in the rural villages still eat Rat as a staple protein.I have seen documentary video evidence recently. Maybe ask the Uighurs and Tibetans about non-expansionary ambitions?
PPP is an outworn measure when it is tested by battle. An american Admiral has recently said that all of the south china sea military island assets can be neutralised in half an hour of military effort.
There are so many glaring holes and puffery in the so called "wise professors "polemic as to be laughable

Please don't gloat about some Chinese eating rats. That's not a sophisticated way to comment about this countries' growing arrogance and aggressive military moves.
I for one actually do actually find this article funny. Obviously produced with the input from the propaganda dept.

Gloating? Unsophisticated? No. I wouldn't Pooh-pooh that comment. The lifetime Teddy- in chief bemoaned in his fabled youth how the villagers could not afford meat. Pity that the gross over-weening party membership consumes such a dis-proportionate share of consumption. Maybe it is more of 'let them eat cake?"

This link https://nb.sinocism.com/p/engineers-of-the-soul-ideology-in does put an interesting argument together and is certainly not pro-China but contains this sentence: "" China’s modern leaders .... overseeing the greatest burst of market liberalisation and poverty alleviation the world has ever seen "".
So pro- or anti-China you have to admire their achievements. This ability to get things done is what worries me; if it is part of his plan President Xi will conquer the world while our government is having another consultation to produce a report that the next govt will ignore.

From your link nb.sinocism.com
It would have provided better balance to have the whole paragraph? Which continues"those who won the internal political battles have retained the totalitarian aspiration of engineering the human soul in order to lead them towards the ever-receding and ever-changing utopian destination. " I do not see that our contemporar liberalism requires such robotic crushing of individual liberty and enquiry. Indeed it is quite dialectically opposed?

“What China wants is a fair and open global system in which all can participate equitably...” I’m sure the citizens of China would like such a system also.
It is very interesting getting an insight into the propaganda and CCP vetting machine which must massage and edit these types of articles.
The author has to separate economic systems from social systems to make the arguments.

10
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Chinesse propganda at best.

Thank you interest.co.nz.

I speak from some experience with multitude of chinese contacts and clients including government clients over the last decade. Pull your head out of the sand or out of your sit-upon

Wow...

Is interest.co.nz getting funding from the Chinese government? Who gave the okay for this to be put on this site?

My first response was to address numerous inaccurate aspects of this screed. Looking through the comments it appears that a detailed response is unnecessary. There are some good items for discussion here. There are also some interesting misdirection and unlikely extrapolation as well.

I will quietly note that a fair trade policy between CH and US is a very long distance away from the present position.

You lot just need a little re-education, a few spots in Northwest China would do..you'll be fine.
After 25 years that is.