China’s competitiveness and American badmouthing

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The latest campaign of the United States against China is the charge that China has excess capacity in a range of manufactured goods and so should restrain its exports. The truth is simpler. China and other countries of East Asia are the world’s low-cost producers of a range of high-quality industrial products that the world urgently needs: solar modules, electric vehicles, wind turbines, efficient batteries, 5G and more. Since the US lags behind China in these sectors, the US is bad-mouthing China, characterizing China’s success as some kind of alleged bad behavior.      

The US approach to China is based on a mix of arrogance, nastiness, and naivety. The arrogance is that the US runs the world, so how dare China have such economic success! The nastiness is that the US is actively out to hinder China’s progress. Progress in our world is hard enough without the US working against it in other countries. The naivety is to believe that the rest of the world will actually subscribe to the US propaganda.

The arrogance was spelled out in 2015 by Ambassador Robert Blackwill and Ashley Tellis in a publication for the Council on Foreign Relations. In March 2015, they wrote: 

“Since its founding, the United States has consistently pursued a grand strategy focused on acquiring and maintaining preeminent power over various rivals, first on the North American continent, then in the Western hemisphere, and finally globally…

“Because the American effort to “integrate” China into the liberal international order has now generated new threats to U.S. primacy in Asia and could eventually result in a consequential challenge to American power globally. Washington needs a new grand strategy toward China that centers on balancing the rise of Chinese power rather than continuing to assist its ascendancy.”

Plainly put, America’s aim is to be Number 1. America’s “grand strategy” is not peace, sustainable development, or wellbeing, but hegemony. America has chosen a grand strategy that automatically pits it against other major powers in a zero-sum struggle. For American strategists, international cooperation is naïve since the US goal is dominance. 

It’s a vain and ultimately doomed objective. After all, the US has 335 million people while China has 1.4 billion people, or roughly four times more. How is the US to remain dominant when China is four times more populous? The American answer implicitly is to keep China in relative poverty, with a GDP no more than one-fourth of the US level. But rest assured that China will not be hegemon either. China’s share of world output will peak at around 20 percent, and China will face significant challenges of a declining and aging population during the 21stcentury. 

The nasty part of the US’s strategy follows its misguided attempt to be global hegemon. The US goal is to slow, if not derail, China’s economic success. Blackwill and Tellis spelled out the game plan in their 2015 article. The US tactics include: trying to cut China out of trade agreements; trying to cut China out from high-tech goods such as advanced semiconductors; surrounding China militarily on the Asian rimlands; and forging new military alliances in Asia.

President Barack Obama started the process by trying to negotiate the Trans-Pacific Partnership, based on the absurd idea of creating a US-Asia trading arrangement that excluded China, despite China being the largest trade partner of most or all of the other Asian countries. It was a dumb idea, and it mercifully failed.  

Trump was more direct. He hit China over the head with a spate of unilateral tariff increases that plainly and brazenly violated the WTO. To sustain this protectionism, the US simply walked away from WTO enforcement mechanisms, to the extent of paralyzing the WTO appellate procedures.  

When Biden came to office, he not only kept Trump’s tariffs in place, but doubled down on them, introducing new layers of protectionism in American legislation (for example in the Inflation Reduction Act) and new layers of technology export bans, notably on advanced semiconductors but also other technologies. Both Trump and Biden went after Huawei, China’s very innovative and extremely efficient private-sector producer of advanced digital technologies, including 5G and several cutting-edge digital industry platforms.   

America’s “success” is to have partly closed off its market to China’s highly competitive, low-cost, high-quality goods.  China’s exports to the US markets not only stopped growing, but actually went into decline. Measured as a share of US GDP, US imports from China fell from 2.6% of GDP in 2018 to 1.6% of GDP in 2023. Yet this has raised prices to US consumers and companies, and brought no joy to American workers. The US manufacturing workforce at around 13 million workers is only slightly higher than in 2017, and remains far lower than before the 2008 Great Recession.

We also learned something quite astounding – but actually par for the course – recently, when Reuters revealed that Trump had tasked the CIA with spreading malicious gossip about China in the social media, including badmouthing of China’s Belt and Road Initiative.  When you can’t beat ‘em honestly, beat ‘em dishonestly. The American way, alas. 

So, the US has partly closed its markets to China’s good and wants Europe to do the same. Since China’s productive capacity continues to surge, there is indeed an artificially created “excess capacity” in China, because the US has blocked China’s exports to the US. Now, the US is warning China against selling its goods to other markets as well.  

Here’s a vastly better and more honest approach. First, the US should acknowledge that it fell far behind China (including Taiwan), Korea, and Japan, in many areas of advanced manufacturing not because of nefariousness of those East Asian countries but because the US lost its way when it came to fostering green and 5G technologies. While the US has been clinging to the continued expansion of fossil fuel production, a real policy dead-end in a world that needs to decarbonize by mid-century, China has been preparing for the zero-carbon energy. Thus, China leads the world in solar, wind, 4th-generation nuclear, EVs, and many other technologies.  

Second, China does not have an “excess capacity” of manufacturing output, because China is producing what the world actually urgently needs to bring about environmental sustainability and economic development. The apparent glut is the result not only of US protectionism, but also of insufficient financing for sustainable development of the emerging economies. The world doesn’t need less of China’s output, it needs more finance to speed the energy transition and to end poverty.  

Third, the US should be cooperating with China, not fighting with it, when it comes to global sustainable development. China’s Belt and Road Initiative (BRI), for example, is a highly innovative and important policy to promote sustainable development in the emerging economies. Rather than badmouthing the BRI, as the CIA did in its propaganda, the USG should be partnering with China, Korea, Japan, and others in a cooperative policy to promote more investments in green and digital technologies in the emerging economies around the world. That’s the kind of win-win policy that should replace America’s destructive — and self-destructive – machinations for hegemony.  



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