America Can’t Ignore The Economic Threat Of A Rising China


In the aftermath of the Communist victory in the late 1940s, the question often asked in Washington was: “Who lost China?” That fueled the McCarthyite inquisition that followed. The question our children might ask is: “Who lost America?”

The long-running side-show around Russian “collusion” focused on the nasty but largely inconsequential ties between some of Donald Trump’s more sleazy aides and their equally disreputable Russian or Ukrainian counterparts. Yet, compared to China, Russia represents at most a pesky but fundamentally second-rate power; Russia’s GDP is smaller than that of South Korea and barely a tenth of China’s.

In the 21st century, how we cope with China will determine the future of American economic and political pre-eminence. One does not have to approve of President Trump’s haphazard diplomacy to support a tough policy. Historically many Democrats, including senators Sherrod Brown, Charles Schumer and Bernie Sanders, have backed measures to curb China’s economic assault.

America’s China faction

Until Trump, many influential voices tended to be soft on China. Some have seen China’s capitalist growth as a confirming the efficacy of market systems, and means to encourage some semblance of liberal democracy to the Middle Kingdom. This logic has collapsed given the increasingly obvious mercantilist and authoritarian nature of the regime.

China’s wealth has won it many prominent allies from both parties, including former GOP Speaker John Boehner, who have signed up to defend China’s interests. Wall Street investors and many of our leading manufacturing companies — notably Apple — have benefited massively from China’s inclusion in the World Trade Organization in 2001. Since 1990 the United States deficit in trade goods with China has ballooned from under $10 billion annually to $419 billion last year. China’s ratio of imports to exports was four to one in 2018.

This trade, one can argue, has benefited American consumers. But it hasn’t come without costs, including the loss of an estimated 3.4 million jobs in the U.S. since China’s admission to the WTO.

It has also hurt many companies, particularly in technology. American firms in China, either as part of their entry fee to the country’s market, or through surreptitious means, have been forced to surrender the historic advantages of our innovative economy; the Chinese government, as one observer noted, encourages its large companies to work as “patriotic thieves.”

Like Stalin’s liberal apologists in the 1930s, some like The Atlantic’s Peter Beinart even deny that China’s economy engages in “cheating,” particularly on the theft of technology. Even people who should know better, like former Vice President Joe Biden, whose own family has benefited from close business ties with Beijing, have minimized the Chinese threat to our economy. Biden recently claimed, incredibly, that “You know, they’re not bad folks, folks. But guess what? They’re not competition for us.”

Time to chill “the cool war”?

Noah Feldman, writing in the left-leaning Democracy, labels our conflict with China a “cool war” as opposed to the Cold War that ensued after 1945. Unlike the Soviet Union, China’s economy has become globalized, increasing the risks from a too drastic break in trade tries.

But China’s pragmatic nationalism, exemplified by expansion into the South China Sea, its Belt and Road initiative and stated desire to dominate virtually all high value-added industry, could threaten the very core of American prosperity if not challenged.

With China’s economic and population growth rate slowing, its bloated real estate markets showing signs of implosion, and industrial production at the lowest level since 2004, this may be the time to strike.

The country faces enormous internal problems as hundreds of millions of ordinary Chinese remain excluded from a system that favors both the very rich and the government-funded clerisy. China, notes one observer, itself is now developing “something resembling a permanent caste system.”

To gain back the initiative, we need to alter, as Trump suggests, not only current trade agreements, but also such things as the Paris Accords, which have exempted China, a larger GHG-emitter than the U.S. and the European Union together, from reducing reduce emissions until 2030. As Western countries de-industrialize, China can use coal, oil and gas to fuel its economic drive for predominance while the West engages in ever more drastic virtue-signaling. We need to make China focus on solving its own environmental and social challenges rather than seek to solve them at our expense.

Additionally, we certainly would be far better off returning jobs to developing countries like Mexico that have been lost industrial employment to Beijing, both for our neighbors’ sake and for the security of our own border.

Liberal economists like Paul Krugman fear that Trump’s actions threaten “Pax Americana,” but that assumes China isn’t playing Sun Tzu’s Art of War. We now face a powerful and highly nationalistic adversary that does not share a commitment to the rule of law and human rights. If unchecked, China's rise to global supremacy could usher in a new authoritarian Dark Ages, shaped by Mandarins and supported by their intellectual and economic satraps, both here and around the world.

This piece originally appeared in The Orange County Register.

Joel Kotkin is the Presidential Fellow in Urban Futures at Chapman University, director of the Chapman Center for Demographics and Policy and executive director of the Center for Opportunity Urbanism in Houston, Texas. He is author of eight books and co-editor of the recently released Infinite Suburbia. He also serves as executive director of the widely read website and is a regular contributor to, Real Clear Politics, the Daily Beast, City Journal and Southern California News Group.

Photo Credit: The White House c/o:Shealah Craighead [Public domain], via Wikimedia Commons