With China, it isn’t a new ‘cold war’
Proponents and opponents of a more confrontational approach to China are both increasingly calling it a new “cold war.”
That’s not an accurate or useful construct, and it leads the discussion about dealing with China in wrong directions. China is not a new Soviet Union.
The Soviet Union was an expansionary geopolitical power that worked incessantly everywhere to spread its communist system of political economy. It was dedicated to the undermining and overthrow of democratic capitalism throughout the globe.
The Soviet Union, however, was not an economic power. There was no worry about the effect of Soviet investment in American businesses or the importation of Soviet goods. The Soviets had no money to invest and didn’t produce anything Americans wanted to buy.
China wants to displace the United States as the dominant influence in the Asian-Pacific. It has territorial ambitions near its borders. And its foreign policy aims to make the world safer for it and other autocratic regimes.
But it does not seek to undermine and ultimately overthrow democratic capitalism in Japan, South Korea and Australia. As the Soviet Union did in Italy, Greece, indeed much of Western Europe. And China is, at present, an economic power. There is reason to worry about the effect its system of state capitalism can have on U.S. capital and consumer markets.
Because of the comprehensive geopolitical ambitions and activity of the Soviet Union, U.S. foreign policy and military capabilities were primarily directed at containing it. Other foreign policy considerations were submerged.
This led to considerable awkwardness. Anti-communist autocrats became allies of convenience. The effects of that reverberate to this day, to our disadvantage.
Dealing with China doesn’t require such a single-minded prioritization or uncomfortable trade-offs on values. In fact, dealing with China requires affirming American values, mostly at home and to a lesser degree abroad.
Economically, China doesn’t represent anything new, other than its size. Autocratic governments with successful state-led economies based on manufacturing exports have arisen before.
But China’s size makes it different in terms of an appropriate American response. Other countries pursuing state capitalism weren’t large enough to worry that they could infect the American market system in any fundamental way. So, there was no need to deny them access to our markets. And many of them – for instance, South Korea and Taiwan – transitioned into democratic governance and market economies of their own.
I believe that China is headed into turbulent economic waters. It has gone about as far as a state-led economy driven by manufacturing exports can take it. Other countries that have taken the next step into a consumer-led market economy have also transitioned to democratic governance. That is a threat to the one-party rule by the Communist Party that Chinese strongman Xi Jinping wants to buttress.
China’s GDP per capita is still less than a third that of the United States. Hard to believe that gap can be bridged much more while still repressing over a billion people.
Who knows what Xi’s doubling down on repression and state control of the economy will produce, or whether the Chinese people will somehow, someday be unshackled.
In the meantime, the United States should deny China access to our markets to the extent we can. Particularly our capital markets, and to a lesser extent our consumer markets.
Majority-owned Chinese companies shouldn’t be permitted to do business in the United States. If tariffs are used to limit Chinese access to our consumer markets, they should be a consistent policy. Not a bargaining chip for promises the Chinese, under the existing regime, won’t keep.
If China transitions toward democratic capitalism, it will be due to internal dynamics, not external pressure. And to the extent it transitions, access to U.S. markets can be opened.
Militarily, China’s territorial ambitions are limited. But it does seek to become the dominant geopolitical influence in the region.
It is in the U.S. interest that the democratic capitalist countries in the region maintain as much room for independent action as possible. But an American protectorate isn’t the most enduring way of accomplishing that, nor the approach that’s in our best interests.
Over time, the military capabilities necessary to provide geopolitical independence should be transitioned from the United States to the regional democratic capitalist countries, which have ample resources to assume more of this responsibility.
The United States doesn’t need to make containing China the principal focus of our foreign policy or our military posture. But we should seek to insulate ourselves from its influence, and point the way for other regional democratic capitalist countries to do likewise.