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Economy

While China Will Keep Talking to the US, It Will Stand Firm Against Bullying on Trade

Sep 11 , 2018
  • Fu Ying

    Vice Chair, NPC Foreign Affairs Committee

Visiting the US recently, I was told by virtually every American I met that attitudes toward China have shifted. This phenomenon, they claimed, cut across bipartisan lines as well as government, business and academic circles. The United States was frustrated at not having shaped China in its own image, despite bringing the country into the World Trade Organisation and helping to enable its economic take-off.

Instead, China had “ripped off” the US by taking advantage of it in trade and business. There was concern at how fast China was climbing the global economic and technological ladder, and that its military was threatening to “elbow out” the US from Asia.

Although attitudes may have changed, I’m not convinced they’ve settled yet. Judging from American history, major strategies are usually shaped through trial and error, in response to specific challenges. Consensus develops along the way. Any adjustment in the US posture towards China will therefore take time. This also means that the final outcome will be affected by how the two countries act and react in the coming months and years.

In evaluating the next steps, the Chinese people first have to ask whether US criticism is fair. It’s true that economic growth hasn’t produced in China a political system similar to the US’. I recall attending an American government programme in the mid-1990s designed for diplomats from developing nations. The topic was US security strategy and policymaking. I had one question: what were America’s strategic objectives for the post-cold-war era?

The answer was unambiguous: to promote US-style democracy and human rights worldwide. And, indeed, the US has pursued those goals consistently over the last two decades, at huge cost to itself and others.

China isn’t America’s only failure – nor the worst one. In fact, given what’s happened to some countries since the “colour revolution” [a series of uprisings in former Soviet states from 2003 to 2005] and the “Arab spring,” the US should be thankful that its efforts haven’t thrown China into political turmoil and economic chaos.

The fact that China has maintained social and political stability and followed its own economic path has contributed to global economic growth, especially after the 2008 financial crisis. Rather than draining US finances the way the nation-building efforts in Iraq and Afghanistan have, China has added greatly to American prosperity.

True, China’s fortunes have risen as well. Taking advantage of the globalisation promoted by the US and Europe, hardworking Chinese gained access to global capital, technologies, expertise and markets, all of which facilitated the growth of industry. Hundreds of millions of Chinese were lifted out of poverty, and living standards in the country have risen substantially.

But it’s important to remember two things. First, Chinese workers paid a steep price for these developments, just as American workers did. After entering the World Trade Organisation, Chinese enterprises were suddenly thrown into direct competition with global peers. Many didn’t survive, leading to huge layoffs all over the country.

At the same time, more than 2,000 laws and regulations had to be revised or abolished at the national level and many more at the local level, causing widespread dislocation.

Second, China’s gains have benefited the US as well. According to an Oxford Economics report, US-China trade helped each American family save US$850 in 2015. Between 2001 and 2016, US commodities exports to China expanded fivefold.

The advent of the “internet of things” and rapid growth in the number of China’s middle- and upper-class consumers will offer even more opportunities for US companies. China is not only an integral part of the global economy, but also an indispensable source of growth. Any attempt to “decouple” it from the US or the global economy will hurt all countries, including the US.

So what should China’s response be? The Chinese have to stay cool-headed in the face of tough but confusing messages from the US. We must stay focused on China’s development, and overcome our own difficulties.

China is not adopting a more confrontational stance toward the US. Its current attitude is part of its overall foreign policy, which is aimed at ensuring a sound environment that facilitates effective cooperation with the outside world to serve China’s development goals. For its purposes, there’s every reason for China to maintain an attitude of “constructive cooperation” with the US.

In fact, changes in US-China relations may help to push China’s own desired reforms. Some requests raised by US companies, such as increased market access, dovetail with recommendations from China’s leaders. The government is, in fact, opening up: eight out of the 11 market-opening measures announced by President Xi Jinping in April have been put in place, covering banking, securities, insurance, credit rating, credit investigation and payment, and so on.

The government is also working harder to improve the business environment and strengthen intellectual property protectionsfor both Chinese and foreign enterprises. Chinese reformers can turn outside pressure to their advantage, using it to bust through internal resistance to necessary changes.

But make no mistake: the Chinese people will stand firm against US bullying over trade. There is talk about China’s economy “sliding” as a result of the trade war. Some expect China to succumb soon. I can tell you that this is wishful thinking.

Yes, China is in the process of deleveraging, which is uncomfortable and painful. But it is a price worth paying for sustaining healthy development. It’s worth remembering that China adopted a stimulus programme to help overcome the global recession triggered by the 2008 financial tsunami in the US. And it’s worth noting that the trade war may slow the necessary process of deleveraging.

Finger-pointing and harming each other won’t solve problems. They will only make things worse. This is why China will continue to work with all countries, including the US, in areas of mutual concern – from climate change to transnational crime, to epidemics and nuclear non-proliferation.

This is also why China should continue talking to the US. Many in China believe that the root causes of US troubles lie within – and therefore need to be solved by Americans themselves. We can see that the US system requires a major overhaul to overcome deep sociopolitical divisions and economic disparities. But that doesn’t relieve China of the responsibility of engaging in dialogue, to find out where the two sides can and cannot agree, and to seek solutions or at least ways to manage persistent disputes.

Such an approach won’t appeal to those who seek confrontation now. But, to borrow a saying, if some people want to chase butterflies, why should the rest of us go dancing along with them?

This article originally appeared in the South China Morning Post.

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