It appears that the US Republicans are raring to go in bringing back former president Donald Trump’s anti-China policies. The newly installed Speaker of the House of Representatives, Kevin McCarthy, made good on his pledge to establish a select committee on China, the first nation to receive the “honor.”
Perhaps afraid of losing popular support or genuinely fearing China’s rise, US President Joe Biden and the Democratic members of Congress have introduced anti-China policies of their own. Case in point is a “full blanket” ban on selling advanced semiconductors to China.
But will the new measures – let’s call them Trumpism II – be tougher than those implemented by the former president, herein referred to as Trumpism I, and be more effective? The answer depends on one’s perspective. To Trump supporters, his policies did wonders for the US. But to Trump’s critics, he took a wrecking balled to the economy and to US standing in the world.
Perhaps a brief reiteration on the effects of Trumpism I policies might shed light on which side has the stronger argument.
If history is any guide, Trumpism I policies were misguided or counterproductive at best. Imposing tariffs on Chinese-made goods in 2018 not only did not stop China’s export machine, but undermined America’s economic recovery from the recession induced by the Covid-19 pandemic and fermented inflationary pressures.
It could indeed be argued that Trump’s efforts at stifling China’s rise and “making America great again” had the opposite effects on trade, economy, technology and geopolitics.
Trade/economic effects
According to the United Nations’ Comtrade database on international trade, Chinese exports to the US actually jumped after Trump imposed tariffs on them. From 2013 to 2017, Chinese exports to the US were valued at around $375 billion, $390 billion, $425 billion, $360 billion and $460 billion respectively. From 2018 to 2021, the US imported $475 billion, $425 billion, $450 billion, $575 billion respectively.
China’s exports to the world also rose year-to-year during that period.
On the economic front, Trump’s trade war against China harmed the US economy just as much as, if not more than, China’s. According to the US Federal Reserve, America’s central bank, US businesses and consumers paid the excise taxes, not China. That resulted in the rise of production costs and consumer prices, incubating inflationary pressure.
Trump also had to subsidize farmers heavily. These, in part, undermined the US economy’s ability to recover from the Covid-induced recession.
China was also hammered by the Covid-19 outbreak, but its early control of the pandemic resulted in more than 8% growth in 2021, according to IMF and other organizations’ data. Though Beijing’s “zero-Covid” policy indeed hindered economic growth, its GDP grew at a higher rate than that of the US in 2022, estimated at 3% around 2% respectively, according to the International Monetary Fund. The IMF has also predicted that China will likely outgrow the US in 2023, estimated at 5% and less than 2% respectively.
Simply put, Trumpism I failed to stop China’s economic and trade growth. The reasons were simple: The tariffs were misguided, in that most of the “imports” from China were produced by US enterprises in China. Moreover, the excise taxes were paid by US importers.
And China’s development model, though not perfect, had a history of success in turning adversity into opportunity. Case in point is China’s massive 2008 stimulus package of more than $580 billion. Spending on infrastructures and other employment creating projects reversed the downward economic trajectory – raising growth from 6.5% in 2008 to more than 9% in 2009, according to IMF statistics.
Social effects
Without any scientific evidence and in spite of studies by the World Health Organization, Trump blamed China for manufacturing the coronavirus (in the Wuhan Institute of Virology) lab that infected more than 100 million and killed a million Americans. Calling it the “Chinese virus” created a surge in the number of anti-Asian hate crimes, culminating in heightened racial tensions between Asians an non-Asians.
However, Asians are hitting back, becoming major gun buyers, according to a June 20, 2021, Time magazine report, citing a US National Shooting Sports Foundation survey. The reason was rising anti-Asian hate crimes. So it could be concluded that Trumpism I might be responsible for reviving anti-Asian sentiments which, if not controlled, could lead to social discontent or instability, increasing violence and social costs.
Technological effects
Trump was the first president to bar Chinese telecommunications firms such as Huawei, ZTE and others from the US market and ban US firms from selling technology goods to China. Trump’s “decoupling” policies hurt both China and the US.
According to US-based GlobalData, China accounts for more than 30% of US microchip sales. That huge loss of revenues caused more layoffs in the already troubled industry. According to the US Semiconductor Industry Association, firms such as Google are laying off around 6% of their workforce. That would adversely affect the US technology industry’s future, financially and technologically.
Huawei’s smartphone business was hit hard, dropping from the top of the heap to the bottom. But the company proved resilient, expanding its business scope. The company is now reporting that its revenues are returning to the pre-ban period, estimated at nearly $92 billion for 2022.
Indeed, Trumpism I was a blessing in disguise. Prior to its policies, Chinese firms were buying US and other countries’ technologies instead of developing their own. With Trump closing that avenue, the Chinese government and technology firms spent hugely to be self-sufficient in the technologies that they want and need.
Geopolitical effects
Trump revived the Quadrilateral Security Dialogue, and renamed the Asia Pacific region as “Indo-Pacific.” In doing so, he might have hoped to turn the late Japanese prime minister Shinzo Abe’s “diamond of democracies” – the US, Japan, Australia and India – into a military alliance against China.
But the problem was China is a major trade partner to all four countries. Simply put, the four countries were unable and unwilling to sacrifice their economic interests in a fight that they might not win.
China is not a weak country; it too possesses conventional and nuclear weapons capable of hitting all four Quad countries. Perhaps it might be with this in mind that the chairman of the US select committee on China, Republican Representative Michael Gallagher, said a war with China would be a disaster (for all those involved).
In the meantime, China is not sitting idly by; it continues to beef up its economic and military might to counter any potential “Quad threat.”
The conclusion of the Regional Comprehensive Economic Partnership (RCEP) strengthened China’s influence in the Asia-Pacific region. Indeed, China has been the Association of Southeast Asian Nations’ largest trade partner for many years. Australia and New Zealand, the United States’ “kin and kith” cousins, are resetting their relationship with Beijing to enhance their trade relationship.
This raises the question: Why is the US hell-bent on crushing China by instituting even tougher policies? Case in point is the US establishment of the select committee on China, a committee on the origin of the coronavirus, and politicians from both major political parties vowing to stop Beijing from “threatening” America. Simply put, America is instilling Trumpism II.
The select committee is meant to find evidence China is responsible for everything that is wrong in America and a threat to US national security. China’s alleged “evil deeds” include infecting the US and the world with the coronavirus, stealing American technology and jobs, and building a military possibly meant to invade the US, just to name a few items of a long list.
Judging by the words of US politicians, it would not be a surprise if the committee finds China guilty on all counts. It will somehow find “experts” to testify that China manufactured Covid-19 at the Wuhan Institute of Virology. US politicians will continue to accuse China of spying on the US with the “balloon crisis.”
Whether or not Trumpism II will succeed in destroying China only time can tell. But if history and empirical evidence are of any merit, the answer is probably no.
Whether China is as “evil” as US politicians insist or is threatening America is unclear or depends on one’s perspective. Yes, China is walking on an ideology and development path different from America’s. But there is no evidence to indicate that China is demanding that the US follow that path. China has always urged other countries to adopt a development and governance platform that suits their own histories and institutions.
China’s “socialism with Chinese characteristics,” though not perfect, proved effective in transforming a backward economy into the world’s second-largest (in nominal exchange-rate terms). That puts China in a position to deal with the US from a position of strengthen. Perhaps that is why US politicians consider China a threat.
Since the model works and China has the resources to sustain economic growth, technological advancement and its military buildup, Beijing has no intention of abandoning it just to please Washington. So Washington must be willing to make the ultimate sacrifice if it wants to stifle China so badly.
Furthermore, China is not isolated other than from the US and its allies. The number of countries joining the Belt and Road Initiative continues to grow, the latest being countries in Latin America. In addition, Beijing’s proposal of BRICS+ is taking root, with countries like Saudi Arabia wanting to join. Last but not least, more than 125 countries count China as a major trade partner, their largest in some cases.
So even if the US and its allies are to decouple from Beijing, China can still maintain its growth trajectory. As mentioned earlier, trade between China and the Global South is surging.
Even if the US and allies are not willing to to business with China, the majority of the world is. Look at Huawei’s fifth-generation (5G) telecommunications products for example – more and more countries are lining up to buy its products, though the US and a handful of its allies have ditched them.
With regard to who is threatening whom, Western media, politicians and pundits fail to mention the United States’ many military bases surrounding China. And China’s single base in Africa is a “threat” to the US and its allies’ national security?
Cut to the chase, the “tougher” Trumpism II policies and measures will will not succeed in toppling China any more than those of the first version.
Ken Moak taught economic theory, public policy and globalization at university level for 33 years. He co-authored a book titled China’s Economic Rise and Its Global Impact in 2015. His second book, Developed Nations and the Economic Impact of Globalization, was published by Palgrave McMillan Springer.