Unwise Moves
Experts say China-u.s. tensions stem from fundamental misunderstanding and mistrust
U.S. President Donald Trump’s trade battle with China has no end in sight and seems to have gone beyond tariffs. After imposing tariffs on $250 billion of imports from China, Trump threatened to “levy even more, with the possibility of substantially more than doubling that number.”
Then in a speech on October 4, Vice President Mike Pence launched a broader attack, accusing China of intellectual property (IP) theft, military aggression and attempts to interfere in the upcoming U.S. midterm elections.
“The lack of trust in the U.S. about China and the lack of knowledge is so profound that the tension is not only going to stay on trade,” Peter Walker, a former senior partner at Mckinsey & Company, told the media on the sidelines of the 2018 U.s.-china Relations Conference held at Columbia University in New York, on October 7. “It’s going to expand to IP issues and all issues related to it.”
Pillars undermined
Huang Yasheng, a professor at the Sloan School of Management of the Massachusetts Institute of Technology, said China is being blamed for manufacturing job losses in the U.S. The allegation has created a political backlash against globalization and against China. Chinese investments are being restricted as well as its labor market, with visas for foreign workers and green cards being curtailed. There are also product market restrictions as a result of slapping tariffs on Chinese goods.
However, economic evidence suggests that the problems and job losses in the U.S. manufacturing industry are overwhelmingly due to technology rather than globalization, Huang said. “It is entirely wrong to blame this issue on China. This should not be one of the important components driving the relationship between the two countries downhill,” he added.
Huang pointed out that the economy, trade and investment, people-to-people interaction and mobility of goods and capital are the pillars of the China-u.s. relationship that could withstand shocks. With these stabilizing pillars, both countries were able to resolve their difficulties in the past. “We have benefited from the pillars,” he said. “All these pillars now are being substantially undermined.”
Lack of trust
Walker said a fundamental distrust due to the differences in the two countries’ models is deeper than the “noise” about trade and the South China Sea issue. “Even though both [ Chinese and U. S.] models have been very successful, there’s a deep level of mistrust,” he said, with their core difference leading to significant misperceptions. China has a strong central government that is formed based on a meritocracy, Walker added. Having a corporate-driven model, with consensus in decision-making and a long-term view, China’s economic results are not at all surprising.
Walker said the biggest takeaway from his 80 trips to China in 15 years is the total disconnect between what he sees in China—a happy people proud of Chinese accomplishments and a prosperous country—and what he reads in the Western