Turbulence in global political economy
Donald Trump's first term in the White House has been marked by his intense "trade war" with China. But what are the motives behind the actions of the US administration? Are they just economic or do they have a deep political basis? Do they pertain to the US trade deficit because of Chinese policies and practices or do they reflect an inherent fear in the United States that any Chinese comparative economic gain will enhance its prospects for political supremacy in the international system, surpassing US supremacy?
The so-called US-China trade war has escalated over the past two years. The Trump administration has accused Chinese authorities of unfair practices that negatively impact the US economy and worsen its trade deficit with China. According to some independent estimates, the trade deficit in favor of China amounts to about US$300 billion.
To date, the US has imposed tariffs on more than $360 billion worth of Chinese goods - from meats and footwear to electronic devices - and China has retaliated with tariffs on more than $110 billion worth of US products.
As already mentioned, at first sight the US motives can be traced to the need to prevent American consumers from buying Chinese goods by rendering them more expensive. By doing so, the US government seeks to protect the domestic market from Chinese competition that among others leads to economic stagnation, slower growth and job losses.
However, the real motives are much deeper. The science of international political economy may help us in this respect. The US is more concerned about the so-called relative gains in its commercial relationship with China than the absolute gains. Putting it more generally, according to the free trade theory - as opposed to protectionism - every country can have gains from transactions that take place without any tariffs or taxes on them.
However, for the US the issue is not how much it will gain in absolute terms, but how much China will gain in relative terms in their trading relationship. Putting it more bluntly, the US concern is: Will China continue to exploit its advantage on production in order to become the largest economy in the world, surpassing the US? And if so, will it in the future translate its economic advantage to military and political power, threatening US security? These concerns are aggravated because of American perceptions that Beijing acts in bad faith in its commercial relationship with the US.
The history of international politics is characterized by the "rise and fall" of great powers. As the late political scientist Kenneth Waltz underlined in the beginning of his famous article "The Emerging Structure of International Politics" in International Security (1993), "For more than three hundred years, the drama of modern history has turned on the rise and fall of great powers. In the multipolar era, twelve great powers appeared on the scene at one time on another…. At the beginning of World War II, seven remained; at its conclusion, two. Always before, as some states sank, others rose to take their places."
China is the emerging great power in the contemporary international system. In this regard, the American establishment seeks to prevent China's rise and its efforts to gain ascendancy at the expense of the US. This political reality was formulated in a specific grand strategy in 2011 when then-president Barack Obama proclaimed a "pivot to Asia" in order to contain Chinese moves there and beyond.
According to Robert Gilpin, a scholar of international political economy who died last year, the status of a great power is eroded by various economic, technological, strategic and other developments. In this context Washington aims to counter Chinese growth in the fear that China will become a hegemon in its region, thus becoming a threat to the American hegemony in the Western Hemisphere. It is a fact that in 2050 China will become the biggest economy in the world.
Political scientist John Mearsheimer's great-powers theory might shed more light on the US-Chinese strategic competition. According to his argument, great powers seek opportunities to gain power (relative power) at the expense of other great powers. As he argues, great powers are caught in a fierce competition with other powers because they are never certain about the intentions of other states. The ideal position for a great power is to become a global hegemon. However, as this is an unattainable goal, great powers focus on more realistic scenarios, such as the establishment of regional hegemony.
In contemporary history the US is the only great power that managed to be a regional hegemon in the Western Hemisphere. The American fear is that if China manages to be a regional hegemon in East Asia, it might threaten the US hegemony in its back yard. Consequently, according to this logic, the US must take all the necessary measures in order to contain China's rise.
Not surprisingly, the Sino-American competition is reflected to other parts of the globe, such as the Middle East. In particular, China will invest the equivalent of $280 billion in its own currency, the yuan, in Iran's oil and gas industry. Apart from the economic significance, this move is of great political importance as it is carried out in a period of intense rivalry between the US and Iran regarding the latter's nuclear program.
Iran and China are traditional economic partners on the energy level and strategic allies as well. Both countries are opposed to what they consider an unrivaled Pax Americana in the Middle East and beyond.