Six strategies to counter Chinese challenges
2021 marks the 100th anniversary of the Chinese Communist Party and China is celebrating. Since Deng Xiaoping started economic reforms and opening up China in 1978, the country lifted 800 million people out of poverty, according to the world Bank, and become the second largest economy in the world after the United States. But today, the direction of China’s reform process is unclear, does not always abide by long-established international trade rules, and presents new challenges. How should the United States react?
China’s economic reform process, which largely involves moving its model from a state-run economic system to a more market-oriented one, has benefited China as well as others. country. This is reflected in the strong US exports to that country, which increased by 455% between 2001, when China joined the World Trade Organization, until 2019, compared to overall US exports to the world which increased. by 126%.
But over the years, China’s reform process has slowed down, interrupted and even sometimes reversed due to concerns of instability and other factors. And because reform typically involves the removal of subsidies from industries, the potential short-term impact, which may include increased unemployment and social unrest, is feared by the Chinese Communist Party. This can make the reform process more dangerous than a high-flying act.
Nonetheless, many agree that economic reform is a key path for China to become a more responsible player in the international rules-based system. It is also essential for China’s future growth, prosperity, stability and ability to escape the middle income trap, a situation in which a country lifts itself out of poverty and achieves some higher per capita income due to various benefits but remains stuck at that level.
With this in mind, it is important to heed the words of former President Barack Obama, who said in 2016: “We have more to fear from a weakened and threatened China than from a prosperous and booming China.” . Either way, one thing is certain: China poses significant challenges for the United States. Therefore, the United States should implement the following six strategies.
No. 1. Restore confidence and unite our allies, then approach China as a unified force.
Many of our friends, including the European Union, the United Kingdom, Canada, Australia, Japan and South Korea, have similar issues with China. Combined with the United States, this group represents about 60% of the world economy and has much more leverage acting together than individually. Nevertheless, this is a delicate question. Many of our allies depend to varying degrees on Chinese markets, and no country wants to become an economic battleground.
President Joe Biden has laid the groundwork for better relations with our allies while drawing attention to China. This became evident in June 2021 during the NATO summit in Brussels. In the final communiqué, NATO leaders agreed that “China’s growing influence and international policies may present challenges that we must meet together as an Alliance.”
No. 2. Cooperate where we can and negotiate where we cannot.
The United States and China should work together where we have similar interests. This includes issues involving climate change and the environment, global economic development and world hunger, nuclear proliferation, terrorism and peacekeeping missions.
The difficult areas for further negotiations are broad and include the piracy of intellectual property, the pressure on American companies to hand over technology in exchange for access to the Chinese market, the unfair restrictions imposed on American companies. that operate there, the export of goods benefiting from massive subsidies in violation of world trade. Organizational rules and the investment of enormous state resources in an attempt to dominate the key technologies of the future.
N ° 3. Renewing the commitment to multinational institutions.
It is about strengthening the United Nations and the World Trade Organization, which former President Donald Trump weakened by rendering his dispute settlement mechanism inoperative in 2019 by blocking appeals chamber appointments. According to Daniel Ikenson, former director of the Center for Trade Policy Studies at the Cato Institute, the United States has won 87.5% of the cases it has brought to the World Trade Organization. The United States and other countries should work more closely through multinational institutions to establish more ways to cooperate and effectively resolve disputes.
# 4. Join the Comprehensive and Progressive Trans-Pacific Partnership.
This organization, which was largely built by the United States, would have accounted for 12 members, 40% of world production and a third of world trade if it had not been rejected by Donald Trump in 2017. With the accession of the United States, it will serve as a check on China’s might in the Asia-Pacific arena.
N ° 5. Develop a new Marshall plan to counter China Belt and Road Initiative.
China’s Belt and Road Initiative, announced in 2013, is a network of railways, roads, pipelines, distribution networks and ports that connects China with other regions and creates the world’s largest platform for economic, political, trade, financial and cultural cooperation spanning 138 countries.
Implemented in 1948, the United States’ European stimulus package, also known as the Marshall Plan, was designed to help rebuild Western Europe after World War II. He paved the way for modernizing industry, improving economic growth, removing barriers to trade, and preventing the spread of communism.
A new U.S. initiative similar to the Marshall Plan would not only help countries become more economically dynamic and politically secure, but would also strengthen U.S. interests and make export markets more lucrative. Some would say that Biden’s Build Back Better World presents such an opportunity but many details remain to be understood.
# 6. It’s a Sputnik time requiring critical home investments.
The challenges posed by the former Soviet Union crystallized when it launched Sputnik 1 into space before the United States in 1957. At that point, America realized there was a threat. serious on the horizon and should do what is necessary to catch up. .
Today, the challenges presented by China are different, but have nonetheless shaken us from a deep sleep and revealed the critical need to strengthen the United States and boost American competitiveness. To that end, it is essential that we direct investments in U.S. R&D, education, health and infrastructure, and support the efforts of the Biden administration to do so.
One evening in Nanjing, China, I had dinner in the building that once housed the American Embassy. Before the end of World War II, Nanjing was the capital of China. This city, which is now the capital of Jiangsu Province, suffered tremendously at the hands of the Japanese during the so-called Nanjing Massacre. With a common cause, the United States and China became partners in an effort to defeat the Japanese. Today, however, many in the United States and China increasingly see themselves as a threat.
The United States and China should work constructively to overcome difficult obstacles, and both countries need to better understand what is at stake. The bottom line: How we see each other today can determine whether we are friends. or opponents tomorrow. And friends can accomplish more than adversaries.
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