The Trump administration’s most significant and lasting decisions will be about U.S. policy toward China. Far more consequential than even the Supreme Court’s composition or immigration policy is whether the 21st century will be marked by conflict or cooperation between the two most prosperous and powerful countries on the planet. The last time there was such a question — when Britain confronted a rising Germany 150 years ago — it did not work out so well.
Since the end of the Cold War, we have lived in an era of almost no genuine great-power competition, which has led to the emergence of a dynamic global economy and a huge expansion of international trade, travel, culture and contact. All this happened under America’s uncontested supremacy — military, political, economic and cultural.
That age is over. Twenty-five years ago, China made up less than 2 percent of global GDP. Today that figure is 15 percent, second only to America’s 24 percent. In the next decade or so, the Chinese economy will surpass the size of America’s. Already, nine of the 20 most valuable technology companies in the world are based in China. Beijing has also become far more active on the global stage, ramping up its defense spending, foreign aid and international cultural missions. Its Belt and Road Initiative — infrastructure investment in dozens of countries — will ultimately be at least seven times larger than the Marshall Plan, if not far more, in inflation-adjusted terms.
The Trump administration has many of the right instincts on China. Beijing has taken advantage of free trade and America’s desire to integrate China into the global system. The administration is right to push back and try to get a fundamentally different attitude from China on trade. But instincts do not make for a grand strategy.
Were Washington to be more strategic, it would have allied with Europe, Japan and Canada on trade and presented China with a united front, almost guaranteeing that Beijing would have to acquiesce. It would have embraced the Trans-Pacific Partnership as a way to provide Pacific countries an alternative to the Chinese economic system. But in place of a China strategy, we have a series of contradictory initiatives and rhetoric.
In fact, the administration seems divided on the broader issue of U.S.-China relations. On one side are people like Treasury Secretary Steven Mnuchin who want to use tough talk and tariffs to extract a better deal from China, while staying within the basic framework of the international system. Others, like trade adviser Peter Navarro, would prefer that the U.S. and China were far less intertwined. This would undoubtedly mean a more mercantilist world economy and a more tense international order. There are similar divides among geopoliticians, with the Pentagon being more hawkish (not least because it ensures huge budgets) and the State Department more conciliatory.
Vice President Mike Pence recently gave a fiery speech that came close to declaring that we are in a new Cold War with China. An outright labeling of China as the enemy would be a seismic shift in American strategy and would certainly trigger a Chinese response. It could lead us to a divided, unstable and less prosperous world. Here’s hoping the administration has thought through the dangers of such a confrontational approach.
History tells us that if China is indeed now the United States’ main rival for superpower status, the best way to handle such a challenge lies less in tariffs and military threats and more in revitalization at home. The United States prevailed over the Soviet Union not because it waged war in Vietnam or funded the contras in Nicaragua but because it had a fundamentally more vibrant and productive political-economic model. The Soviet threat pushed America to build the interstate highway system, put a man on the moon, and lavishly fund science and technology.
The former head of Google China, Kai-Fu Lee, has written an important book arguing that China is likely to win the race for artificial intelligence — the crucial technology of the 21st century. He points out that China’s companies are highly innovative, its government is willing to make big bets for the long term, and its entrepreneurs are driven and determined.
Tariffs and military maneuvers might be fine at a tactical level but they don’t address the core challenge. The United States desperately needs to rebuild its infrastructure, fix its educational system, spend money on basic scientific research and solve the political dysfunction that has made its model less appealing around the world. If China is a threat, that’s the best response.