How Should China Respond to a Changing U.S.?
(Bloomberg Opinion) -- Visiting the U.S. recently, I was told by virtually every American I met that attitudes toward China had shifted. This phenomenon, they claimed, cut across bipartisan lines as well as government, business and academic circles. The U.S. was frustrated at not having shaped China in its own image, despite bringing the country into the World Trade Organization and helping to enable its economic takeoff. Instead, China had “ripped off” the U.S. by taking advantage of it in trade and business. There was concern at how fast China was climbing up the global economic and technological ladder, and that its military was threatening to “elbow out” the U.S. from Asia.
- Part of a series of articles highlighting the themes of the Bloomberg New Economy Forum, being held Nov. 6-7 in Singapore.
Although attitudes may have changed, I’m not convinced they’ve settled yet. Judging from American history, major strategies are usually shaped through trial and error, in response to specific challenges. Consensus develops along the way. Any adjustment in the U.S. posture toward China will therefore take time. This also means that the final outcome will be affected by how the two countries act and react in the coming months and years.
In evaluating next steps, the Chinese people first have to ask whether U.S. criticisms are fair. It’s true that economic growth hasn’t produced in China a political system similar to the U.S.’s. Interestingly, I recall attending an American government program in the mid-1990s designed for diplomats from developing nations. The topic was U.S. security strategy and policy-making. I had one question: What were America’s strategic objectives for the post-Cold War era? The answer was unambiguous: to promote U.S.-style democracy and human rights worldwide. And indeed, the U.S. has pursued those goals consistently over the last two decades, at huge cost to itself and others.
China isn’t America’s only failure — nor the worst one. In fact, given what’s happened to some countries since the “color revolutions” and the “Arab Spring,” the U.S. should be thankful that its efforts haven’t thrown China into political turmoil and economic chaos. The fact that China has maintained social and political stability and followed its own economic path has contributed to global economic growth, especially after the 2008 financial crisis. Rather than draining U.S. finances the way the nation-building efforts in Iraq and Afghanistan have, China has added greatly to American prosperity.
True, China’s fortunes have risen as well. Taking advantage of the globalization promoted by the U.S. and Europe, hardworking Chinese gained access to global capital, technologies, expertise and markets, all of which facilitated the growth of industry. Hundreds of millions of Chinese came out of poverty, and living standards in the country have risen substantially.
But it’s important to remember two things. First, Chinese workers paid a steep cost for these developments, just as American workers did. After entering the World Trade Organization, Chinese enterprises were suddenly thrown into direct competition with global peers. Many of them didn’t survive, leading to huge layoffs all over the country. At the same time, more than 2,000 laws and regulations had to be revised or abolished at the national level and about 190,000 more at the local level, causing widespread dislocation.
Second, China’s gains have benefited the U.S. as well. According to Oxford Economics, U.S.-China trade helps each American family save $850 every year. Between 2001 and 2016, U.S. commodities exports to China expanded five times, much higher than the 90 percent average increase. The advent of the “internet of things” and rapid growth in the number of China’s middle- and upper-class consumers will offer even more opportunities for U.S. companies. China is not only an integral part of the global economy, but also an indispensable source of growth. Any attempt to “decouple” it from the U.S. or the global economy will hurt all countries, including the U.S.
So what should China’s response be? The Chinese have to stay cool-headed in the face of tough but confusing messages from the U.S. We must stay focused on China’s development, and overcome our own difficulties.
China is not adopting a more confrontational stance toward the U.S. Its current attitude is part of its overall foreign policy, which is aimed at ensuring a sound environment that facilitates effective cooperation with the outside world to serve China’s development goals. For its purposes, there’s every reason for China to maintain an attitude of “constructive cooperation” with the U.S.
In fact, changes in U.S.-China relations may help to push China’s own desired reforms. Some requests raised by U.S. companies, such as increased market access, dovetail with recommendations from China’s leaders. The government is, in fact, opening up: Eight out of the 11 market-opening measures announced by President Xi Jinping in April have been put in place, covering banking, securities, insurance, credit rating, credit investigation and payment, and so on. The government is also working harder to improve the business environment and strengthen intellectual property protections for both Chinese and foreign enterprises. Chinese reformers can turn outside pressure to their advantage, using it to bust through internal resistance to necessary changes.
But make no mistake: The Chinese people will stand firm against U.S. bullying over trade. There is talk about China’s economy “sliding down” as a result of the trade war. Some expect China to succumb soon. I can tell you that this is wishful thinking.
Yes, China is in the process of deleveraging, which is uncomfortable and painful. But it is a price worth paying for sustaining healthy development. It’s worth remembering that China adopted a stimulus program to help overcome the global recession triggered by the 2008 financial tsunami in the U.S. And it’s worth noting that the trade war may slow the necessary process of deleveraging.
Finger-pointing and hurting each other won’t solve any problems. They will only make things worse. This is why China will continue to work with all countries, including the U.S., in areas of mutual concern — from climate change to transnational crime to epidemics to nuclear nonproliferation.
This is also why China should continue talking to the U.S. Many in China believe that the root causes of U.S. troubles lie within — and therefore need to be solved by Americans themselves. We can see that the U.S. system requires a major overhaul to overcome deep sociopolitical divisions and economic disparities. But that doesn’t relieve China of the responsibility to engage in dialogue, to find out where the two sides can and can’t agree, and to seek solutions or at least ways to manage persistent disputes.
Such an approach won’t appeal to those who seek confrontation now. But, to borrow a saying, if some folks want to chase butterflies, why should the rest of us go dancing along with them?
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Fu Ying is vice chairperson of the Foreign Affairs Committee of China's National People's Congress, and of the Academic Committee of China's Institute of International Strategy at the Chinese Academy of Social Sciences.
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