One would think that the first world leader US President Joe Biden would call after taking office is his Chinese counterpart, Xi Jinping, because the US-China relationship is arguably the most important – economically, technologically and militarily – to America and the world. Yet that relationship has sunk to the lowest level since the two countries established diplomatic relations.
Biden must reverse that downward trend if he is to fulfill his campaign promises of reviving the US economy, addressing climate change, and other matters, and he couldn’t do that without having a serious conversation with Xi.
Therefore we note with a sigh of relief that Biden finally did call Xi Jinping at the eve of the Lunar New Year. Regardless of what exactly the two leaders talked about, opening the communication channel is the right step moving forward.
As the US and China are the world’s two largest economies, accounting for more than 40% of global GDP and deeply entwined, US economic recovery will likely go nowhere without repealing former president Donald Trump’s tariffs and lifting the ban on selling technology products to China.
China’s comparative advantage in manufacturing and its huge and increasingly affluent domestic market have made that country indispensable to many US enterprises.
An efficient, comprehensive and innovative infrastructure system, ranging from procurement to distribution, makes China more competitive and productive than any country, including the US, in manufacturing, explaining why more than 90% of US businesses operating there have refused to relocate elsewhere in spite of threats from the US government.
China will likely continue to play an important role in promoting and sustaining corporate America’s business and financial well-being because producing and selling in China generate huge economies of scale.
China’s efficient infrastructure and skilled labor force increase productivity, affording American enterprises that produce in the country competitiveness. Adding to those benefits are the enormous economies of scale that the world’s largest consumer market generates for US businesses. It is difficult to see how reasonable businesspeople can ignore the benefits that the Chinese market affords them.
Besides, Trump’s tariffs were paid by US businesses and consumers in the form of higher production costs and consumer prices, both of which eroded economic growth, from more than 3% in 2018 to less than 2.5% in 2019. Worse, the Covid-19 pandemic contracted the economy, already sinking thanks to the US-China trade war, into a recession not seen since the 1930s-era Great Depression.
Equally noteworthy is the adverse effect of China’s tit-for-tat tariff measures, putting US farmers at financial risk and increasing taxpayers’ burden. It is well documented that Trump spent billions of dollars of taxpayers’ money to bail out farmers. And the number of farms put into a financial bind, including bankruptcies, rose under Trump.
And even if US firms cave in to the government’s pressure to produce elsewhere, others will likely replace them in China. For instance, European and Japanese enterprises are increasing their investments in China, in part because of the government’s ability to reverse misfortunes and introduce pragmatic policies for long-term economic recovery.
For example, the Chinese government’s “draconian but effective” measures to stop the spread of the coronavirus that causes Covid-19 allowed it to reopen the economy sooner rather than later, culminating in its position as the only major economy to enjoy an expansion in 2020.
China’s “dual circulation” strategy of designating domestic demand as the economic driver, augmented by innovation and further opening up to the world, prompted many analysts, including the International Monetary Fund, to predict that the country’s gross domestic product could increase by 8% in 2021.
Furthermore, China might not need the US as much as some Western pundits would have us believe. The Asian giant signed the Regional Comprehensive Economic Partnership with 14 other Asia-Pacific countries and the China-EU Comprehensive Agreement on Investment at the end of 2020.
At the just-concluded China-CEEC (Central and Eastern European Countries) Summit, Beijing vowed to increase trade and investment between the two sides. Equally if not more important is the Belt and Road Initiative, which connects China to more than 80 countries around the world with trillions of dollars in investment and trade.
The US definitely requires China’s cooperation on climate change, a priority issue for Biden, in light of his rejoining the Paris Accord.
China and the US are not the only the world’s biggest emitters of greenhouse gases, but are the world leaders in green energy development and production. Working together on the issue is therefore crucial in reducing the atmosphere’s temperature.
Global geopolitical stability cannot be attained without China and the US in the conversation. Both countries possess lethal conventional and nuclear weapons, capable of inflicting significant damages to each other and the world.
In this sense, recruiting “like-minded” countries to “contain” China’s rise is nonsense. As alluded to earlier, Asian, European and other “like-minded” countries might not willingly join the US in such a quest.
This raises the question: Why did Biden send two aircraft-carrier battle groups to exercise “freedom of navigation operations” (FONOPs) in the South China Sea recently? Surely he knows that will not deter China from claiming territories within the “nine dash line” or stopping it from developing and producing more advanced and lethal weapons.
Indeed, joining the US in “containing” China could amount to committing eco-geopolitical suicide, explaining why the Quadrilateral Security Dialogue comprising the US, Japan, Australia and India has remained in the “talking stage” for more than a decade.
In spite of all the efforts put in by the Trump administration to revive the Quad in the form of the US Indo-Pacific Strategy, either one or all three partners hesitated to establish a formal alliance against China, and for good reasons: They depend on China for their economic well-being and would likely be the first targets of Chinese missiles should war break out.
The fact of the matter is neither the US and its allies on the one hand nor China on the other has an appetite for war. FONOPs are therefore a waste of time and money.
Since former US president Barack Obama instituted his “pivot to Asia” policy, the US has mounted numerous FONOPs in the South China Sea, but instead of scaring Beijing into submission, they actually hardened China’s position on defending its territorial claims. It has responded by sending warships to block US naval vessels from entering its 12-mile exclusive economic zones and installing more weapons on the islands.
Biden should stop wasting resources on “containing” China, instead spending them on fulfilling his campaign promises. China is simply too big to be coerced, and besides, the Asian giant did not commit a fraction of the misdeeds that the US has accused it of doing.
The regime in Beijing is no angel, but it does have the right and means to do what it thinks is best for the country. China does exactly that: introducing vocational training to minimize radicalization in Xinjiang, imposing a national-security law on Hong Kong to regain economic and social stability, and defending its core interests.
Ken Moak taught economic theory, public policy and globalization at university level for 33 years. He co-authored a book titled China’s Economic Rise and Its Global Impact in 2015. His second book, Developed Nations and the Economic Impact of Globalization, was published by Palgrave McMillan Springer.