Reason for optimism in gloomy trade war
Editor’s Note:
As trade tensions between China and the US escalate and an increasing number of analysts tend to believe that no silver lining can be seen in years to come, Stephen Orlins (Orlins), president of the National Committee on US-China Relations, noted he is still optimistic about the bilateral relationship in the long run. Why is he an optimist against such a gloomy backdrop? What can both sides do to ease tensions? Orlins shared his views with Global Times (GT) reporter Li Aixin on these issues in an exclusive interview during The Third Taihe Civilizations Forum held in Beijing over the weekend.
GT: China and the US have begun imposing additional tariffs on each other’s goods since September 1. Some say that the two countries are running out of tariff cards, do you think the tariff war might spill over to other fields?
Orlins: I think it’s the opposite. I think the other fields have affected the trade discussions. I think that the deterioration in the national security relationship, the decision in December of 2017 to brand China a strategic competitor and China’s response to that has led to the trade war being more intense.
If you look at the Huawei ban, it’s a trade issue, but the president of the US said that the sale of Huawei goods in the US was a national security issue. Then it became a trade issue. I think that both the national security issues, the political issues flow on to the trade issues and they flow back. It’s really not one way or the other. It’s both ways.
GT: What do Americans and US companies think of US President Trump’s move to escalate the trade war?
Orlins: Clearly, the common person in the US does not benefit from the trade war. But there is, especially among the political base of President Donald Trump, there is a belief that even though they have to eat bitterness, they have to lose sales of soybeans or corn or grain to China. They feel it’s worth it in order to have a level playing field with China.
GT: Will it play a role in Trump’s next move?
Orlins: Yes, it will affect the decision of President Trump, whether to roll back the tariffs, to maintain the tariffs, or to increase the tariffs. I think it’s going be a combination of the political pressure that is brought on him and the trade war’s effect on the US stock market.
The president speaks about it very often. He uses the Dow Jones Index and the S&P 500 Index as his grade for how he’s doing. When we break new records in the stock market, he says, “You see, I’m doing a great job, the stock market is reaching a new high.” Then when he spoke about the tariffs, we saw the stock market go way down. And now it’s starting to creep back up again, as people believe we may have some progress in the talks in early October.
GT: The Wall Street Journal recently published an article entitled “Has America’s China Backlash Gone Too Far?” What is your view on this? Do you think it has gone too far? Orlins: I think US policy toward China damages the American people. I think our current policies toward China are bad for the overwhelming majority of Americans. They may be good for a tiny segment of America, but they’re bad for most Americans. So I see actions that are taken that I find very difficult to understand.
It’s difficult to understand. In part it’s driven by Chinese government’s policies that have gradually frustrated people in the Congress, in the business community, in NGOs, in academia. So those policies have put a foundation under those who want to get very tough with China.
But these tariffs hurt average Americans. If they are increased on December 1, they will significantly affect poor Americans.
If you think about tariffs on consumer goods, ultimately the price has to be passed on to the consumer, despite what the president says about China paying those tariffs. Ultimately the Walmart customers, the Costco customers have to pay more. The estimates are now that they’re going to have to pay about $800 to $1,000 more per family. Now if you’re rich Americans, $800 or $1,000 doesn’t really matter. But if you are making $15,000 or $18,000 a year, an increase of $1,000 means you cannot buy all the goods. You gotta make a choice. Do I buy a new pair of pants? Or do I buy a new pair of shoes? So I think these policies are terribly unfair to poorer Americans.
I think the National Defense Strategy, which defines China as a strategic competitor and has now led to our spending $750 billion on defense, and has led China to respond by increasing its expenditures on defense, hurts both societies.
When you spend so much on defense, where do you get the money to rebuild your infrastructure? Where do you get the money to fund education? Where do you get money for poverty alleviation? Where do you get money for all of these things? What’s happening is we’re seeing a diversion of resources from where the US needs it and where China needs it into our defense budgets.
I commute on the subway every day to work in the US in New York, I see the failure to fund infrastructure. America’s infrastructure is pathetic. It dates from the 1950s and 1960s and doesn’t have new technology. The signaling systems in the New York subway system date back decades. When I take the train to Washington, the track is so bad that it shakes and I get dizzy by the time I arrive in Washington three hours later. If that were in China, I would arrive in less than 45 minutes. Washington to New York takes me three hours. I would take the money that we’re spending unnecessarily on the strategic competition and direct it into things that help the people. What’s happening in this policy is it has lost sight of the people.
I am tough on the US government because I believe that a constructive US-China relationship helps the people of the US. It also helps the people of China. But my priority is the people of the US. People always ask me, who do I represent? The American people. Who speaks up for the American people today, as our social programs, our infrastructure, our education are all underfunded?
GT: You said that we should be more optimistic about the China-US relationship even if it is going through hard times now. In what ways do you think the two can start getting out of the current predicament?
Orlins: There are a lot of little things that can be done that could then begin to improve the relationship.
There are many problems that exist today in China, your publication and other publications refer to the US as the black hand in a lot of its problems. That’s not the case, but it becomes the narrative. In the US, the narrative is everything that China does is bad – it’s trying to kick the US out of East Asia; it’s hurting all of these businesses. The positive stories in both China and the US are never told. What the governments need to do, what organizations like ours need to do is to create positive news.
There are a lot of little things that could be done to create kind of a positive momentum in the short term. The reason why I’m an optimist in the long term is because of the American and Chinese [people]. The people of each country still have strong bonds.
We have 360,000 Chinese college and graduate students in the US. We have tens of thousands of Americans here. We have numerous kinds of relations between the Chinese and American people. And in the end, they are going to come to the conclusion that a cooperative relationship is necessary to deal with the threats to their lives.
What I always say is a mother in Shanghai and a mother in New York have the same fears for their children. I was driven out of my home by a climate change storm called Sandy that flooded my home and affected my life, the life of my children. I lived through 9/11 terrorism. The Chinese lived through the massacre in the Kunming rail station. Terrorism is a common fear. We all lived through Ebola. We saw how American and Chinese scientists jointly fought this pandemic. And then the economic crisis of 2008 kind of made mothers fear for the economic opportunity for their children. And those are the real threats, not the South China Sea, not Taiwan, not a strategic rivalry. People will ultimately realize that.
I have great confidence in the people. The way it works in the US is that democracy works slowly, but it ultimately reaches the right conclusion. And the right conclusion is going to be a cooperative relationship between the US and China, not this decoupling, not the creating of two technological ecosystems. Because that’s going to slow economic development in both China and the US.
People are going to recognize that and it’s going to happen while I am still alive.