America, we need to talk about China
One of the most negative byproducts of the Trump presidency is that all we talk about now is Donald Trump. Don’t get me wrong: How can we not be fixated on a president who daily undermines the twin pillars of our democracy, truth and trust?
But there are some tectonic changes underway behind the Trump noise machine that demand a serious national discussion, like the future of U.S.China relations. Yet it’s not happening — because all we talk about is Donald Trump.
Consider this: On Nov. 9, European leaders gathered in Berlin to mark the 30th anniversary of the fall of the Berlin Wall. It was an anniversary worth celebrating. But no one seemed to notice that almost exactly 30 years after the Berlin Wall fell, a new wall — a digital Berlin Wall — had begun to be erected between China and America. And the only thing left to be determined, a Chinese business executive remarked to me, “is how high this wall will be,” and which countries will choose to be on which side.
This new wall, separating a U.s.-led technology and trade zone from a Chineseled one, will have implications as vast as the wall bisecting Berlin did. Because the peace, prosperity and accelerations in technology and globalization that have so benefited the world over the past 40 years were due, in part, to the interweaving of the U.S. and Chinese economies.
The messy, ad hoc decoupling of these two economies, driven by miscalculations by leaders on both sides, will surely disrupt those trends and the costs could be huge. We might want to talk about that.
Former Treasury Secretary Hank Paulson gave a speech here a year ago trying to kick-start that discussion. “For 40 years,” Paulson noted, “the U.s.-china relationship has been characterized by the integration of four things: goods, capital, technology and people. And over these 40 years, economic integration between the two countries was supposed to mitigate security competition. But an intellectually honest appraisal must now admit both that this hasn’t happened and that the reverse is taking place.”
That reversal is happening for two reasons. First, because the U.S. is — rightly — no longer willing to accept China’s unfair trade restrictions on importing of U.S. goods and its stealing of the intellectual property of U.S. firms — something we tolerated for many years before China became a technology powerhouse.
And second, because, now that China is
a technology powerhouse — and technological products all have both economic and military applications, unlike the toys, T-shirts and tennis shoes that used to dominate our trade — the two sides are struggling to figure out what to buy and sell from and to each other without damaging their national security.
The net result, argued Paulson, is that “after 40 years of integration, a surprising number of political and thought leaders on both sides advocate policies that could forcibly de-integrate the two countries across all four of these baskets.” And if that trend continues, “we need to consider the possibility that the integration of global innovation ecosystems will collapse as a result of mutual efforts by the United States and China to exclude one another.”
That, Paulson concluded, is “why I now see the prospect of an Economic Iron Curtain — one that throws up new walls on each side and unmakes the global economy, as we have known it.” Yikes!
This decoupling is not all Trump’s fault — not by a long shot. China benefited tremendously from the globalization system that the U.S. and its allies built since World War II, but Beijing has often been grudging about making any sacrifices to maintain it. But what to do?
I am not blasé about letting China sell technologies in America that might be used for espionage, but I am increasingly of the view that everyone spies on everyone — and always will. I am increasingly of the view that while surely some Chinese students are engaged in espionage, a vast majority are not, and their talents nourish our industries and schools. And I am increasingly worried that by imposing more and more export and visa controls we will be cutting ourselves off from the access we need to the global investment pools, customers and collaborative scientists and engineers to maintain our technological lead.
I still believe that the most open systems win — they get all the signals of change first, they attract the most high-iq risktakers/innovators and they enrich and are enriched by the most global f lows of talent, ideas and capital. That used to be us.
China is our economic competitor, economic partner, source of talent and capital, geopolitical rival, collaborator and serial rule-breaker. It is not our enemy or our friend. We need to pause and ask ourselves exactly where we are heading with this whole tech/trade war with China. And Beijing needs to do the same.