On Hostile Coexistence with China

Remarks to the Freeman Spogli Institute for International Studies China Program

Ambassador Chas W. Freeman, Jr. (USFS, Ret.)
Senior Fellow, Watson Institute for International and Public Affairs, Brown University
Stanford, California, 3 May 2019

President Trump’s trade war with China has quickly metastasized into every other domain of Sino-American relations.   Washington is now trying to dismantle China’s interdependence with the American economy, curb its role in global governance, counter its foreign investments, cripple its companies, block its technological advance, punish its many deviations from liberal ideology, contest its borders, map its defenses, and sustain the ability to penetrate those defenses at will.

The message of hostility to China these efforts send is consistent and apparently comprehensive.  Most Chinese believe it reflects an integrated U.S. view or strategy.  It does not. Secret Empires: How th... Peter Schweizer Best Price: $9.41 Buy New $14.90 (as of 10:05 EST - Details)

There is no longer an orderly policy process in Washington to coordinate, moderate, or control policy formulation or implementation.  Instead, a populist president has effectively declared open season on China.  This permits everyone in his administration to go after China as they wish.  Every internationally engaged department and agency – the U.S. Special Trade Representative, the Departments of State, Treasury, Justice, Commerce, Defense, and Homeland Security – is doing its own thing about China.  The president has unleashed an undisciplined onslaught.  Evidently, he calculates that this will increase pressure on China to capitulate to his protectionist and mercantilist demands.  That would give him something to boast about as he seeks reelection in 2020.

Trump’s presidency has been built on lower middle-class fears of displacement by immigrants and outsourcing of jobs to foreigners.  His campaign found a footing in the anger of ordinary Americans – especially religious Americans – at the apparent contempt for them and indifference to their welfare of the country’s managerial and political elites.  For many, the trade imbalance with China and Chinese rip-offs of U.S. technology became the explanations of choice for increasingly unfair income distribution, declining equality of opportunity, the deindustrialization of the job market, and the erosion of optimism in the United States.

In their views of China, many Americans now appear subconsciously to have combined images of the insidious Dr. Fu Manchu, Japan’s unnerving 1980s challenge to U.S.  industrial and financial primacy, and a sense of existential threat analogous to the Sinophobia that inspired the Anti-Coolie and Chinese Exclusion Acts.

Meanwhile, the ineptitude of the American elite revealed by the 2008 financial crisis, the regular eruptions of racial violence and gun massacres in the United States, the persistence of paralyzing political constipation in Washington, and the arrogant unilateralism of “America First” have greatly diminished the appeal of America to the Chinese elite.

As a result, Sino-American interaction is now long on mutual indignation and very short on empirically validated information to substantiate the passions it evokes.  On each side, the other is presumed guilty of a litany of iniquities.  There is no process by which either side can achieve exoneration from the other’s accusations.  Guesstimates, conjectures, a priorireasoning from dubious assumptions, and media-generated hallucinations are reiterated so often that they are taken as facts.  The demagoguery of contemporary American populism ensures that in this country clamor about China needs no evidence at all to fuel it.  Meanwhile, Chinese nationalism answers American rhetorical kicks in the teeth by swallowing the figurative blood in its mouth and refraining from responding in kind, while sullenly plotting revenge.  君子报仇十年不长.[1]

We are now entering not just a post-American but post-Western era.  In many ways the contours of the emerging world order are unclear.  But one aspect of them is certain: China will play a larger and the U.S. a lesser role than before in global and regional governance.  The Trump administration’s response to China’s increasing wealth and power does not bode well for this future.  The pattern of mutual resentment and hostility the two countries are now establishing may turn out to be indelible.  If so, the consequences for both and for world prosperity and peace could be deeply unsettling.

For now, America’s relationship with China appears to have become a vector compounded of many contradictory forces and factors, each with its own advocates and constituencies.  The resentments of some counter the enthusiasms of others.  No one now in government seems to be assessing the overall impact on American interests or wellbeing of an uncoordinated approach to relations with the world’s greatest rising power.  And few in the United States seem to be considering the possibility that antagonism to China’s rise might end up harming the United States and its Asian security partners more than it does China.  Or that, in extreme circumstances, it could even lead to a devastating trans-Pacific nuclear exchange.

Some of the complaints against China from the squirming mass of Sinophobes who have attached themselves to President Trump are entirely justified.  The Chinese have been slow to accept the capitalist idea that knowledge is property that can be owned on an exclusive basis.  This is, after all, contrary to a millennial Chinese tradition that regards copying as flattery, not a violation of genius.  Chinese businessfolk have engaged in the theft of intellectual property rights not just from each other but from foreigners.  Others may have done the same in the past, but they were nowhere near as big as China.  China’s mere size makes its offenses intolerable.  Neither the market economy in China nor China’s international trade and investment relationships can realize their potential until its disrespect for private property is corrected.  The United States and the European Union (EU) are right to insist that the Chinese government fix this problem.

Many Chinese agree.  Not a few quietly welcome foreign pressure to strengthen the enforcement of patents and trademarks, of which they are now large creators, in the Chinese domestic market.  Even more hope the trade war will force their government to reinvigorate “reform and opening.”  Fairer treatment of foreign-invested Chinese companies is not just a reasonable demand but one that serves the interests of the economically dominant but politically disadvantaged private sector in China.  Chinese protectionism is an unlatched door against which the United States and others should continue to push.

But other complaints against China range from the partially warranted to the patently bogus.  Some recall Hermann Göring’s cynical observation at Nuremberg that: “The people can always be brought to the bidding of the leaders. That is easy.  All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country.”   There is a lot of this sort of manipulative reasoning at play in the deteriorating U.S. security relationship with the Chinese.  Social and niche media, which make everything plausible and leave no truth unrefuted, facilitate this.  In the Internet miasma of conspiracy theories, false narratives, fabricated reports, fictive “facts,” and outright lies, baseless hypotheses about China rapidly become firm convictions and long-discredited myths and rumors find easy resurrection.

Consider the speed with which a snappy phrase invented by an Indian polemicist – “debt-trap diplomacy” – has become universally accepted as encapsulating an alleged Chinese policy of international politico-economic predation.  Yet the only instance of a so-called a “debt trap” ever cited is the port of Hambantota, commissioned by the since-ousted autocratic president of Sri Lanka to glorify his hometown.  His successor correctly judged that the port was a white elephant and decided to offload it on the Chinese company that had built it by demanding that the company exchange the debt to it for equity.  To recover any portion of its investment, the Chinese company now has to build some sort of economic hinterland for the port.  Hambantota is less an example of a “debt trap” than of a stranded asset.

Then too, China is now routinely accused of iniquities that better describe the present-day United States than the People’s Middle Kingdom.  Among the most ironic of such accusations is the charge that it is China, not a sociopathic “America First” assault on the international status quo, that is undermining both U.S. global leadership and the multilateral order remarkably wise American statesmen put in place some seven decades ago.  But it is the United States, not China, that is ignoring the U.N. Charter, withdrawing from treaties and agreements, attempting to paralyze the World Trade Organization’s dispute resolution mechanisms, and substituting bilateral protectionist schemes for multilateral facilitation of international trade based on comparative advantage.

The WTO was intended as an antidote to mercantilism, also known as “government-managed trade.”  China has come strongly to support globalization and free trade.  These are the primary sources of its rise to prosperity.  It is hardly surprising that China has become a strong defender of the trade and investment regime Americans designed and put in place.

By contrast, the Trump administration is all about mercantilism – boosting national power by minimizing imports and maximizing exports as part of a government effort to manage trade with unilateral tariffs and quotas, while exempting the United States from the rules it insists that others obey.

Read the Whole Article