Chinese Premier Li Keqiang attends the signing ceremony of the Regional Comprehensive Economic Partnership (RCEP) agreement after the fourth RCEP Summit, held via video link on Nov. 15, 2020. Chinese Commerce Minister Zhong Shan signed the agreement on behalf of China.
Xinhua News Agency | Xinhua News Agency | Getty Images
The biggest hole in the Biden administration’s otherwise encouraging efforts to better compete with China — a void that could undermine all the other pieces — is the lack of an international trade strategy.
While President Xi Jinping’s China accelerates his efforts to negotiate multilateral and bilateral trade and investment agreements around the world, both Republicans and Democrats in the U.S. have grown allergic to such arrangements.
“The Chinese believe deeply in the significance of the correlation of forces, and they believe that correlation at the moment is in their favor,” says Stephen Hadley, former national security advisor to President George W. Bush. If the U.S. fails to alter that Chinese conviction, it won’t regain the leverage needed to deal with Beijing.
“The most important missing element in changing that Chinese calculus is a trade strategy,” Hadley says, one that could rally global allies, provide American jobs and growth, and counter escalating Chinese efforts to organize the world economy around itself.
Former U.S. Secretary of State Madeleine Albright once called the U.S. the world’s “indispensable country,” but Xi is now positioning China as the world’s “indispensable economy.”
By 2018, 90 countries in the world traded twice as much with China as with the U.S. By 2019, China surpassed the U.S. as the largest global recipient of foreign direct investment. The underlying message now is that China’s market is so large, its liquidity so deep and its post-Covid-19 rebound so dramatic (up 18% in the first quarter), that no reasonable country can resist its embrace.
“In this age of economic globalization, openness and integration is an unstoppable historical trend,” President Xi said this week to the Boao Forum for Asia. Without mentioning Washington by name, he said that “attempts to ‘erect walls’ or ‘decouple’ run counter to the law of economics and market principles. They would hurt others’ interests without benefiting oneself.”
It is far too easy to punch holes in Xi’s statement: China remains rife with market protections, and state intervention at home and abroad is growing. Intellectual property theft and cybercrimes continue.
Yet without a modern, forward-looking trade strategy, the U.S. enters this global punch-up with one arm tied behind its back.
“The U.S. and China are engaged in a strategic competition that will determine the shape of global politics this century,” wrote Hank Paulson Jr., the former U.S. treasury secretary, in The Wall Street Journal. “But when it comes to trade, a critical dimension of that competition, America is ceding the field.”
That undermines early wins in the emerging…
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