Thursday, October 22, 2020

Tough on China: How a Trade Alliance Can Stop a Trade War

As part of my political science degree, I took a course titled International Relations Theory. For my final project, I drew a fascinating subject that I have been contemplating since the 2016 presidential campaign: U.S./China relations through the lens of neoliberalism/globalism. The following is my case study analysis, which if I were in a position to have a policy stance on the subject rather than just an opinion, this would be it.

Case History

When evaluating the subject of U.S./China relations, the agents may seem apparent, but such a list is clearly dependent on the theoretical perspective. As complicated as the dynamics between the United States and China have become over the past half century, when examining them through the lens of neoliberalism/globalization, we must incorporate economic and security factors and international organizations/alliances affected by them. Standing prominently in this discussion are the World Trade Organization (WTO) of which China has recently become a member and the Trans-Pacific Partnership (TPP), of which the U.S. more recently denounced the possibility of joining. Both states are also permanent members of the United Nations Security Council, granting them each veto power over all council resolutions while ensuring they will both maintain a cursory level of diplomacy. Also relevant is the small nation of Taiwan, whose sovereignty or lack thereof is a standing issue between the two primary actors.

Within this framework, the primary actors share some broad yet conflicting interests. As self-interested hegemonic powers, the U.S. and China each strive for national security and economic stability. They both exercise expansionist economic policies with the objective of establishing a semblance of control over the markets in which they participate while still promoting active involvement from less influential actors. The U.S. has expanded its reach through trade agreements such as the North American Free Trade Agreement (NAFTA, potentially to be superseded by USMCA) and active involvement in the WTO, while China has leveraged its superiority over and accessibility to the Third World or Global South states in Africa and southeast Asia to implement its Belt and Road Initiative in which it finances infrastructure improvements in the impoverished nations in exchange for economic cooperation.

The approaches of the two nations regarding national security are stark contrasts that may best be described as realist v. liberal as the U.S. maintains a public cooperative presence within the borders of countless global allies while China is militarily internalized and self-sufficient with alliances predominantly paternal, as they exert their strength to steer the policies of other states. This contrast is likely attributable to a combination of leadership preference, geographic necessity, and the age of the respective government systems of the U.S. and China, as the former has been building a global presence for centuries, while the latter’s relationships have only been significantly forged in the post-World War II era.

The conflicts arising from this relationship dynamic are primarily economic, as each strives to balance against the other. As the preeminent hegemon, the U.S. exercises policies that work to corral the expansionist objectives of China, beginning with major economic/security alliances with neighboring Pacific states such as Japan, South Korea, and Australia and continuing with the implementation of ever-increasing tariffs.

From an economic perspective, the modern history between the two states begins in 1972, when Richard Nixon traveled to China to establish a relationship with Chairman Mao Zedong and open a dialogue regarding difficult issues like Taiwan through the Shanghai Communiqué. This ultimately led to the U.S.’s One China policy—recognizing Chinese sovereignty over Taiwan—that was established in 1979 by President Jimmy Carter and the Taiwan Relations Act signed that same year sustaining relations with Taiwan without violating the aforementioned policy.

The next leap in relations came in 2000, when Bill Clinton signed the U.S.-China Relations Act, establishing a permanent normal trade partnership and paving the way for China to join the WTO the next year. In 2008, the two economic dependence between the two states reached a new level when China became the largest foreign holder of U.S. debt. Possibly to counter this leverage, in 2011, the U.S. announced a policy pivot toward Asia and a preliminary agreement with eight other nations to establish the Trans-Pacific Partnership.

Relations remained stable until the election of President Donald Trump, who has demonstrated an ignorance and general aversion to international diplomacy. He first endangered the U.S./China relationship by inadvertently recognizing Taiwan as a sovereign state, but quickly corrected course in February 2017 by affirming the One China policy. President Trump later began exercising his authority to implement tariffs for diplomatic reasons, most notably targeting Chinese imports in March 2018. Fourteen months later, the announcement was made that these tariffs would be dramatically increased.

 

Case Analysis

While the recent history of U.S./China relations stands as a mostly positive development when viewed through the lens of neoliberal and globalist theories, key problems have continued to arise in a seemingly dialectic pattern. The environment within which these issues perpetuate is best explored with respect to the two primary states and the major economic and diplomatic partnerships that relate to the U.S. and China if a solution is going to be deemed necessary and accordingly proposed as required.

Given their hegemonic status, determining the affected economic parties in the analysis could fairly be expanded to the global level, but a sufficiently robust discussion is possible through the inclusion of the primary agents already introduced: the U.S., China, the WTO, the UN, and the TPP. 

Since World War II, the U.S. has been building global relationships and institutions to stabilize diplomatic relations and prevent further global conflict while also establishing stronger economic ties with other states. As one of the two key agents, they feature prominently in the conflicts arising from the relationship, having served as a foundation for the international agencies influencing or affected by the two states and from the dually cooperative/combative relationship with China.

Within the historical discussion, the U.S. has seemed to have been the continuous pursuer of improved and increased ties with China, striving to establish a unilateral relationship that could be broadened to incorporate China into the modern international community. Based on the current situation, succeeding in this objective has allowed China to partially transcend this dynamic and establish themselves as an economic hegemon.

Since the establishment of the People’s Republic of China in 1949, China has been working to establish its international presence following decades of domination by Japan. Their initial diplomatic efforts guide them into a partnership with the fellow communist state of USSR—also a UN security council permanent member—but that relationship collapsed over ideological differences in 1969, opening the door to a new and comprehensive economic and diplomatic relationship with the U.S.

By eschewing the Soviet model of communist economics and opening relations for capitalist trade partnerships, China has brilliantly leveraged their relationship with the U.S., which has opened the door to the international community and the direct influence it allows. Likely the critical moment in the development of China’s economy occurred when they became members of the WTO in 2001 after finally having normalized their trade relationship with the U.S. in the year previous.

As the preeminent international trade alliance, members of the WTO accounted for roughly 96% of total global trade in 2005.[i] With such an overwhelming share of the global market, any state caught outside this network is doomed to struggle economically, and as an original member of the organization, the U.S. is capable of serving as a conduit to membership for other states seeking accession.[ii] With China’s pursuit of global relevance and the U.S. desire to stabilize their presence in Asia after years of violent conflict in Korea and Vietnam, the WTO and its predecessor, the General Agreement on Tariffs and Trade from 1947, served as the most suitable vehicle to carry the two UN members to their destination.

The establishment of a strong trade relationship between the U.S. and China first required some semblance of diplomacy, which had existed prior to World War II, but was compromised by the civil war in China that ended in 1949. Despite this, the ties were still loosely bound by the membership of both states in the United Nations, which had been founded in 1945. As an organization, the UN was formed to replace the failed League of Nations and serve as an international diplomatic body providing a level of cooperation that would hopefully prevent another violent global conflict. As the diplomatic relationship between the two states continually strengthened over the decades, so went their economic relationship to the point that “Made in China” has become a pejorative retort by U.S. residents. This rapid expansion of Chinese participation in global trade and manufacturing established them as a rival economic hegemon to the U.S. similar in scale to that of the Cold War U.S.S.R.’s military hegemon, illustrating not only a dynamic power shift in in Eurasia, but an equally dynamic shift in global philosophy, establishing economics as the dominant measure of real power.

China’s rise to power and subsequent hegemony has allowed them some independence from and influence over U.S. policy decisions as the two states become ever-increasingly intertwined economically and China becoming the largest U.S. creditor. As a means of countering this growing reliance, the U.S. shifted its focus to other states in the Pacific, working to establish the Trans-Pacific Partnership with eleven other prospective members. This agreement would allow the U.S. to reestablish itself in a position of economic dominance over China by shifting some of the manufacturing and export to other member states. This would also curb the expansion of Chinese influence by establishing a firm U.S. foothold in the region and freeing the neighboring states from their dependence on China’s economic strength.

Throughout this period of economic and diplomatic advancement between the two states, the relationship has been quietly and continuously strained by the diplomatic ties between the U.S. and Taiwan, over which China claims sovereignty. Formally, the U.S. adheres to the One China policy and does not recognize Taiwan or its leadership, but it engages with the nation independently of China, as does the WTO. As China’s influence has grown, so has the focus on this issue in global politics, as they become more assertive in steering the global dialogue on diplomacy.

Returning to the dialectical model, U.S./China relations are currently in antithesis following the 2016 U.S. Presidential election. Under the guidance of Peter Navarro—a prominent critic of Chinese expansion and influence—Donald Trump has taken extensive measures to weaken the relationship between the two states through elaborate public denunciations of Chinese policies and the establishment of economically irresponsible tariffs that he believes will provide the leverage he willingly sacrificed by formally withdrawing the U.S. from the TPP which took effect in December 2018 after Australia became the sixth member to ratify the agreement.[iii]

Further complicating the narrative is China’s continued economic expansion through their Belt and Road Initiative, which has been weakly denounced by the U.S. government without any subsequent action taken. In a world with a U.S.-led TPP, this initiative would appear as a simple counter to a clear attempt to curb Chinese influence, as two hegemons continued to wrestle for dominant influence over global policy, but under the current circumstances, China is simply acting as a diplomatic force in Asia and Africa as they leverage their rapidly growing wealth to fertilize their budding international authority.

Adhering to tenets of post-1989 neoliberalism, the U.S. and China have shown an adherence to self-interested policies through the utilization of international institutions and globalist trade policies for most of their modern diplomatic history. However, present issues between the two states contradict the myth that “neoliberalism is the end of history, and we are there,” and China’s continued governance under one-party rule suggests a notable limitation of the neoliberal perception that economics driving politics leads to harmonious political processes like democracy in economically dominant states. Despite China’s authoritarian nature, globalization’s ability to spread economic and cultural liberalism has not been notably curbed, as they serve as the dominant market for the U.S. multimedia industry and contain an expansive and vibrant consumerist environment.

The solutions to the present issues between the U.S. and China through neoliberal/globalist concepts have already been conceived and proposed but have been dismissed by current U.S. leadership. This perspective focuses on the value of free trade and market-based capitalism, while the Trump administration has taken regulatory action to limit both of those with China and the surrounding countries, while China under Xi Xinping continues to expand its reach and influence the nature of globalization as the only economic power willing to enter into meaningful new trade agreements with other states and trade organizations. For the balance of power to be reestablished and achieve the some semblance of a dialectical synthesis, U.S. leadership will need to walk away from the isolationist policies of the last three years and reassert the state’s authority over global economics and diplomacy by reentering the TPP and expanding influence over the UN and the European Union.

 

Conclusion

The most condemning criticism of the U.S. relationship with China with respect to globalization rises from the latter’s ascension to hegemonic status within four decades of the two states establishing a new diplomatic relationship. The unilateral approach employed by the U.S. as a means to stabilize international relations in east Asia seems both lazy, desperate, and short sighted, as they effectively woke a sleeping giant by granting access to international markets to an authoritarian government with a massive and subservient population. While this allowed for rapid economic growth and a prolonged and continuing diplomatic peace between the U.S. and the region, the unmitigated growth of the Chinese economy has established them as a rival hegemon that will surpass the U.S. in influence if no course correction is taken by their leadership.

The neoliberal solution to the problems arising from this relationship is to simply re-enter the Trans-Pacific Partnership and allow a robust U.S.-centric and trade-friendly market to flourish exclusive of but proximate to China to serve as a check on the expansion of their economic influence through the Belt and Road Initiative. While this reactionary measure was originally proposed to be precautionary, being late to the party is still better than not being invited, and the remaining members of the TPP would almost certainly welcome the U.S. and its expansive market presence onto the dance floor.

Whether these or similar necessary actions are taken will likely decide whether the key problems in the U.S./China relationship are intractable or instructional, but for the relationship to shift to a predominantly cooperative model, the economically driven neoliberal spread of democracy across Asia will have to reach Beijing, as China’s artificial suppression of individual rights and economic advancement will stand as a perpetual barrier to a friendly diplomatic relationship. This was first witnessed at Tiananmen Square in 1989 and is currently being demonstrated by the ongoing situation in Hong Kong which serves as the bridge between China and the global economy and may be the epicenter of a democratic revolution. Regardless of this outcome, an unchecked Chinese hegemon may eventually topple under its own weight, but it will certainly crush countless national economies when the time comes, and the U.S. is unlikely to avoid the impact.


[i] Accession in perspective. https://www.wto.org/english/thewto_e/acc_e/cbt_course_e/c1s1p1_e.htm#fnt2 Accessed 2 December 2019.

[ii] United States of America and the WTO. https://www.wto.org/english/thewto_e/countries_e/usa_e.htm Accessed 2 December 2019.

[iii] Smyth, J., & Harding, R. (2018). Trans-pacific partnership to start in december. FT.Com, Retrieved from https://search-proquest-com.proxybz.lib.montana.edu:3443/docview/2127491639?accountid=28148

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