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How Should the Republican Party Approach China Policy?

How Should the Republican Party Approach China Policy?

On Tuesday, delegates to the Republican National Convention in Cleveland, Ohio, chose Donald J. Trump as their nominee for President of the United States. We asked a range of contributors how the Republican Party should approach China policy. — The Editors

Peter Navarro, Policy Advisor to the Donald J. Trump for President Campaign:

As a lame duck president in 2001, Democrat Bill Clinton successively lobbied for China’s entry into the World Trade Organization. Donald Trump has described this single political act as the worst trade deal in American history, and the following statistics certainly support that assessment: Since China joined the WTO, over 70,000 American factories have closed. Average median household income has remained stagnant. Our annual GDP growth rate has been cut to almost half its historic average. Over 20 million Americans can’t find a decent job at a decent wage. The United States now owes China over $2 trillion dollars.

Donald Trump’s position on trade is revolutionizing a Republican Party that has, along with Democrats like Bill and Hillary Clinton, exhibited a blind faith in a free trade ideology — even as these ideologues have turned a blind eye to China’s massive mercantilist cheating. This is a revolution because Donald Trump will no longer tolerate “free trade” that isn’t also fair trade. What does “fair trade” mean? In the context of China, it means that the People’s Republic must once and forever stop using “weapons of job destruction” to attack the U.S. manufacturing base and American workers themselves. These carefully documented weapons include illegal export subsidies, currency manipulation, intellectual property theft, and China’s rampant use of sweatshops and pollution havens.

In addition, China also engages in “forced technology transfer” in direct contradiction to the rules of the World Trade Organization. For example, in order to participate in the Chinese market, companies such as Boeing, General Electric, General Motors, and Intel must transfer sensitive technologies that China will then use to outcompete these American rivals. On top of all these unfair mercantilist trade practices, China also engages in all manner of protectionist non-tariff barriers. Donald Trump has said loudly and clearly to both China and the American electorate that this kind of mercantilist behavior shall no longer stand. Free trade must also be fair trade, and Trump will use every policy instrument at his disposal to level the playing field, not just with China but also with any country that engages in unfair trade practices.

To those who say the new Republican Party will be “protectionist,” Trump says that there is a very clear difference between defensive tariffs to shield America from cheaters and the kind of protectionism countries like China engage in. Indeed, it was the free trading Ronald Reagan who slapped defensive tariffs on a cheating Japan in the 1980s — Trump will do the same to any country that continues to cheat.

To those who say Donald Trump will start a trade war, Trump says we are already in a trade war — and it’s long past time we fought back. This undeclared trade war started in 1993 when Bill Clinton signed NAFTA and promised America 200,000 new jobs — and then we all watched as America lost over 700,000 jobs instead. And that undeclared trade war took on a whole new dimension when China began flooding our markets with its illegally subsidized exports in 2002.

From a purely macroeconomic standpoint, Trump is absolutely correct that the best jobs program is not more fiscal and monetary stimulus — which has only doubled our national debt since Barack Obama took office while skewing the balance sheet of our “quantitative easing” Federal Reserve. Rather, Trump knows that America faces a structural problem of chronic and massive trade deficits that can only be handled through far-reaching trade and tax reforms.

With a strong president in the White House, China will respect America both in the economic and military arenas. This will lead to greater economic prosperity and far more stability in Asia than the current “talk loudly and carry a small pivot stick,” “free trade at any cost” defense and economic policies of Barack Obama and Hillary Clinton.

Patrick Chovanec, Managing Director, Chief Strategist at Silvercrest Asset Management:

There is a reason why an overwhelming number of Republican economic and foreign policy advisors want nothing to do with Donald Trump’s campaign. It’s because bluster is no replacement for thoughtful strategy when it comes to handling our relationship with China and other challenges. It’s also because Trump’s particular brand of bluster is so often oblivious or even hostile to the ideas and principles that have animated Republican foreign policy since Ronald Reagan.

China’s dictatorial one-party regime, its mercantilist “beggar-thy-neighbor” policies, and its increasingly aggressive stance in the region do present real challenges to America’s values and interests. Ironically, on the first, Donald Trump appears to comment approvingly of the “strength” Beijing showed in suppressing peaceful protest. On the second, Trump seems to believe the answer lies in aping China’s approach to trade as a zero-sum, win-lose proposition. On the third, Trump — who has never given any sign that he knows or cares to know what is happening in the South or East China Seas — has recklessly called into question the very alliances, with South Korea, Japan, and others, the United States relies upon to counter China’s growing ambitions and protect our interests in the region.

There is plenty to criticize in current U.S. policy. Around the world, President Obama has repeatedly, and unwisely, drawn “red lines” and then declined to enforce them, giving Beijing confidence that it can call our bluff, whether on freedom of navigation or cyber raids on the U.S. government or U.S. companies. President Obama has, mistakenly, pointed to China’s state-led investment programs in solar energy and high-speed rail as examples the United States should follow, even as they turned out to be costly boondoggles. And he has abjectly failed to build popular or political consensus for a trade deal (the Trans-Pacific Partnership, or TPP) that he made the litmus test of U.S. credibility in Asia.

Republicans can and must do better. We must draw clear lines with China that we are willing to defend, improve and build upon — not turn our backs on — the alliances that make this possible. We must make the case that for Americans to thrive, we must thrive in a global economy that isn’t going away. Rather than imitating the Chinese and building walls, we must go out and strike deals that present China with a choice: open your markets, like us, or get left behind. And finally, we must speak critically, not admiringly, of dictatorships that bully their own people.

These are disheartening times, when we have a Republican nominee who mocks rather than champions these ideas, who shows little interest in the reality of the U.S.-China relationship, but speaks instead with the cartoonish bombast of a WWF wrestling match. But there are Republicans who do know, and do care, what a strong and sensible path forward looks like, and we are not going to stand back and let Donald Trump define our party.

Sidney Rittenberg, Founder and President of the China Consulting Team Rittenberg Associates, Inc.:

Navarro’s Trumped-up logic is shameful: Post hoc ergo propter hoc (“after this, therefore because of this”).

Even if his figures were right, his claim that what happened after China joined the WTO is because China joined the WTO is unsubstantiated.

Damien Ma, Fellow at The Paulson Institute:

A big problem with explaining trade is that costs tend to be concentrated and benefits more diffuse across the economy. I think the Autor/Dorn/Hanson paper “China Shock” has driven a lot of the trade debate in this cycle (much as that Rogoff/Reinhart paper, “Growth in a Time of Debt,” drove debate on austerity in the United States).

Many have been quick to point out the empirical findings in the Autor/Dorn/Hanson work of Chinese import substitution having a larger impact on U.S. jobs than previously assumed. Yet those same people neglect to mention the second part of that conclusion, which is that the “China shock” is in all likelihood a one-time event and we’re nearing the tail end of that era.

A key question is whether in this cycle, this populism and China rhetoric will translate into actual votes, which is why I found this snippet from a recent Wall Street Journal piece by Bob Davis rather interesting:

Mr. Trump has made China-bashing a campaign centerpiece. Of America’s 100 counties with industries most exposed to Chinese imports, 89 voted for him in Republican primaries. Of the 100 least-exposed counties, before all of his competitors dropped out, 28 gave him the nod.

David Wertime, Senior Editor, Foreign Policy:

Having served as a Peace Corps Volunteer in China, and as someone who continues to track grassroots sentiment there, I am certain that the U.S. position in the bilateral relationship depends for its strength not just on our superior economic and military assets, but on a values system that prizes inclusiveness, openness, tolerance, and personal freedom. There’s a reason that young Chinese people pine to move to the United States, study here, and make lives here. There’s a reason that reformers in the Communist Party continue to think they have a chance to push China in a better direction, even as current President Xi’s administration shows itself to be increasingly insular and retrograde. There’s a reason that hope continues to burn for Chinese rights lawyers, civil society organizers, and dissident authors during a dark time for their nation. It’s because countries outside China’s borders, led by the United States, light a different path to prosperity, one that permits the kind of expressive and creative latitude vital for individual human flourishing.

Unfortunately, Donald Trump has repeatedly evinced nothing but disdain for bedrock U.S. principles of tolerance and inclusiveness — principles that distinguish this country from China far more profoundly than language, geography, ethnicity, arms, or the respective quantity of our cash reserves ever can. I can imagine few strategic setbacks more profound, few single events more damaging to our position vis-a-vis China, than Trump’s election to the presidency.

Worrisome also for our relationship with China is the fact that thus far Trump has shown himself to be a terrible manager. Unwilling to share authority outside of a tight inner circle, evidently mercurial and moody in temperament, and most comfortable communicating with constituents through vacuous and angry tweets, Trump has seen his campaign lurch from embarrassment to embarrassment. The prospect of him managing the U.S. Government — the most complex and powerful organization the world has ever seen — is frankly terrifying. My sense from off-the-record conversations with Chinese officials is that they feel a combination of alarm and giddiness at Trump’s possible (if unlikely) election. Alarm because he would be given the nuclear codes; giddiness at the power vacuum an incompetent Trump White House would open.

There’s no question that U.S. leaders have not done nearly enough to prepare U.S. people to fight in the global arena. There is data showing that China’s entry into the WTO hurt U.S. workers. It’s clear now that many U.S. policymakers, eager to trumpet the overall gains from global trade, have been too reluctant to reckon with the very real and concentrated losses that global trade can inflict. Programs like Trade Adjustment Assistance, which help workers affected by trade deals, are not nearly substantial enough. Handling the fallout from these decisions will require an empathic, forward-looking, policy-oriented president, not one too busy promoting himself to bother articulating the specific ways he’d actually help U.S. workers. (I note the total and revealing absence of any concrete proposals in Mr. Navarro’s entry.)

So, to answer the question: how should the Republican Party approach China? Its members and leaders should disavow Trump’s candidacy as quickly and clearly as they possibly can.

James A. Millward, Professor of History in the School of Foreign Service at Georgetown University:

There has been considerable confusion in the political discussion from both major U.S. political parties about free trade, trade with China, and the TPP. Awash in the rhetoric of the campaign, I’m sure nine out of 10 Americans, of any political persuasion, believe that the much-reviled TPP is, as Donald Trump has said, a deal that would benefit China. Peter Navarro’s comments here talk about NAFTA and China’s WTO accession as trade deals that disadvantaged the United States. He doesn’t mention the TPP specifically, but to me, the implication is clear that, like Trump, he’s talking about the TPP Trump’s opposition to the TPP often has been couched in criticism of China. That’s nonsense, because China is excluded from the TPP.

No, China was not involved in the TPP negotiations and no, it has nothing to do with TPP deals. Neither trade benefits nor the restrictions of the TPP will accrue to China. In fact, the TPP is as much a strategic hedge against and challenge to China’s rising power as it is a trade deal between the United States and 11 other countries (Australia, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and Brunei Darussalam). Chinese critics of US policy argue, with some justification, that TPP is an example of the United States’ efforts to contain China. TPP offers tariff-free access to U.S. markets to countries that compete with China for access to U.S. markets. China is in fact promoting its own Asian trade treaty, the Regional Comprehensive Economic Partnership (RCEP), that would lower trade barriers to several of the same countries without the environmental, labor, food-safety, intellectual-property and other regulations that the massive TPP deal requires of its signatories. Though eventually they might overlap, for now RCEP is a treaty that competes with TPP.

One can debate the pros and cons of “free trade” in a globalizing world. Right now, both major U.S. parties have their economic nativists and internationalists. But it makes no sense whatsoever to argue, as now seems to be the Republican nominee’s position, that a) China cheats in its trade with the U.S. and b) therefore the United States should oppose the TPP. If you want to cut a deal that is tough on China, as Trump claims to want to do, the TPP is just such a deal.

This conversation thread is about Republican China policy, but it is worth noting how Hillary Clinton, in running away from the TPP. she was involved in negotiating, has missed an opportunity to demonstrate both her own toughness on China and her opponent’s ignorance of foreign policy.

Edward Friedman, Professor Emeritus in the Department of Political Science at the University of Wisconsin, Madison:

While not supporting Trump’s ill-informed proposals for how to deal with a continuing decline of manufacturing jobs in the United Statesand agreeing with Wertime on a need for a re-think on U.S. trade adjustment policies, nonetheless, Trump’s position on the consequences of the Communist Party’s state’s turbo-charged, neo-mercantilist version of East Asian Development State policies is in harmony with the critique of former Democratic presidential candidate Sanders and, as Ma writes, is backed by the data in the Autor, Dorn, Hanson paper.

Is there a persuasive critique of the findings of that National Bureau of Economic Research (NBER) paper that I have missed?

Since neo-mercantilist Japan and Germany have continued for a long time to amass forex from industrial exports, why should one believe that the NBER paper’s forecast that China will soon stop amassing forex from its neo-mercantilist industrial exports?

Where Trump errs is in blaming trade agreements — which Trump neglects to mention were passed by the U.S. Congress because of Republican votes — on the other political party in the United States.

The data on manufacturing decline in the U.S. and in all the other industrialized democracies, however, shows no inflection points linked to NAFTA or Chinese entry into the WTO. There is, nonetheless, a problem. China’s state mercantilist policies have taken advantage of the re-structuring of the world market which was transformed by technological changes and financial globalization which helped the global south grow much, much faster since 1982, now accounting for half of global GDP, a change which an ethicist might even praise as major moral progress, which, for better or worse, would not be a selling point in American politics.

There are hard questions here. Sweatshop factories, such as the one my grandfather worked in in New York City, is a step up the economic ladder for poor people with few skills. What the United States sees as raising labor standards is seen in poor countries as protecting rich countries from competition by the poor in their major comparative advantage, low wages.

I believe that technological changes such as container shipping, communications and transportation revolutions, and the spread of new knowledge which hugely shrinks the time of the production cycle, along with cheap finances, have re-shaped the world market in ways which allow the global south, not just China or Mexico, to rise faster.

Talk of free trade when the world market is so very different from the world market era that gave rise to free trade doctrine is not helpful. Nor is it helpful to forget the role in the rise of the United States of infant industry protection, high tariffs, and intellectual property theft.

It would be helpful to de-politicize this debate. It is not about Trump versus Clinton or Democrats versus Republicans. It is about the challenges of a very different world market for all the peoples on our planet earth.

Kevin Slaten, Researcher on Chinese labor rights and civil society:

For starters, Republicans should stop seeking out the next war. Historically, Bush II was good at war-making — though maybe not war-winning. The fear and simplistic narrative of war, splitting the world into ‘us’ versus ‘them,’ can be an effective tool to mislead and corral the public. Such a tool is especially potent in a national campaign during a time when people are struggling economically and told to dread impending, random violence. Donald Trump now looks to formulate another war, a trade war with China. The narrative is custom-made to evoke fear and nationalism: A far-off country with an authoritarian government and a bone to pick is maliciously stealing your livelihood and weakening your country.

There is considerable imprecision, narrowness, and risk in Trump’s China narrative.

First, an examination of history will teach us that manufacturing began declining in the United States in the 1970s, long before China came on the scene as an industrial powerhouse. Huge structural shifts were caused by our North American allies via NAFTA, but we are not declaring “war” (i.e., needlessly demonizing) Canada and Mexico because of their economic impact on the United States. (But based on Trump’s wall and immigration rhetoric, we cannot seriously doubt that he would not escalate conflict with America’s southern neighbor.)

The second fundamental problem with Trump’s China narrative, reflected in Mr. Navarro’s comments above, is that it seems to seriously misunderstand the motivations of China’s leaders. As detailed in the extensive economic and political analysis on ChinaFile and elsewhere, China’s economic policy is heavily driven by domestic concerns of prosperity and “social stability.” China did not set out to displace American factory workers or derail the American economy. In fact, American prosperity and consumers play an important part in China’s development model.

A third problem with Trump’s argument is normative. To demonize China at-large in the next great “war” engenders greater animosity in Chinese people. As we all witnessed after the recent arbiration ruling on the South China Sea, Chinese nationalism can burn hot when given the opportunity to direct itself at a foreign enemy. The United States further empowers Beijing autocrats by playing into this narrative. Echoing David Wertime, many Chinese look to the openness and tolerance of Americans as inspiration. A China policy which seeks to make enemies of Chinese people is counterproductive.

What does a productive China policy look like?

The U.S. should win over the Chinese people by being a model of prosperity and dignity. This begins at home. America has economically disenfranchised much of its population over the past three decades, foremost because of its own economic and financial policies. While America’s adjusted GDP has nearly tripled since 1980, wages have remained stagnant for most Americans. (Nominal GDP grew more than six times.) The size of the U.S. economy has grown 30 percent since China entered the WTO in 2001. (Nominal GDP nearly doubled.) The problem is not growth, it’s distribution of new wealth and opportunity for the average person to enjoy that growth. Discrimination and marginalization of ethnic and religious minorities in America, a bulging prison population, and incredibly frequent gun homicides also damage our ability to serve as a model to China. Pursuing fairness and economic justice at home is a critical part of influencing China.

The U.S. should encourage fairness and rule of law in China by demanding more of American companies which too often take advantage of poor enforcement of labor and environmental laws in China and elsewhere. America should also hold up peaceful human rights activists and non-governmental organizations as models of citizenship. This includes U.S. officials frequently mentioning the names of Chinese people and organizations that are arbitrarily threatened or imprisoned by Chinese authorities. These people are often seeking grassroots and equitable solutions to Chinese social problems that are broadly acknowledged by Chinese citizens. By championing activists and NGOs, the U.S. will be recognizing the creativity and potential of the Chinese people and in turn making them allies in our China policy rather than enemies.

In short, America’s China policy should include modeling principled governance and leadership. But whether the Republicans under Trump are capable or willing to make America a model nation is a question that arouses great skepticism.

Sulmaan Khan, Assistant Professor of International History and Chinese Foreign Relations at the Fletcher School, Tufts University:

The Republican Party has bigger problems than China policy. With Trump’s nomination, the one thing that should concern Republicans is: can they continue to exist as a serious political party?

If Trump becomes president, the rest of us have far, far bigger problems than China, too. Mr. Navarro speaks of Trump’s “position.” Given his candidate’s propensity to say one thing one day and the complete opposite the next, I find it impossible to tell what Trump’s position on anything is. One of two major parties has gone, to use Lindsey Graham’s immortal coinage, “bats hit crazy.” I doubt this will win the “respect” Mr. Navarro promises, from China or anyone else.

Andrew J. Nathan, Class of 1919 Professor of Political Science at Columbia University:

If I were a policy-maker in Beijing, I would love to see Trump as president. With his criticism of the war in Iraq, praise of Vladimir Putin, and conditioning of Washington’s fulfillment of its defense treaty obligations on allies’ contributions — more broadly, with his idea that we have to fix things at home before we fix things abroad — Trump signals that he would hardly throw money down the South China Sea rat hole trying to match China’s rising deployments, merely to defend the interests of a bunch of feckless allies and other weak states that aren’t even allies. With his vagueness and self-contradiction on foreign trade – he was against it before he said in his joint interview with Mike Pence that he is for it—he shows that bluster on this topic is just the opening position for another lesson in the art of the deal. Trump is emerging as the ultimate “whatever works” guy: without fixed principles, he will follow the path of least resistance. This is good for China, because the easiest course in Asia would be to yield gracefully to the shifting balance of power, as recommended for example by Henry Kissinger, the Australian strategist Hugh White, and others. Whether this is really good for the United States in the long run is another question. I doubt it.

Taisu Zhang, Associate Professor at Yale Law School:

From the Chinese government’s perspective, a Trump presidency would be a mixed blessing at best: Yes, as Andy Nathan rightly points out, Trump might pull back from the South China Sea, but this would likely quicken the pace of Japanese militarization. The net outcome of Trump’s apparent isolationism would, therefore, still probably be positive for the Chinese government, but perhaps not quite as positive as it would initially seem. On the other hand, a trade war with an impulsive and rash American leadership would create enormous economic risks for what is already a vulnerable Chinese economy. The Chinese economy is indeed shifting away from exports to domestic consumption, and from manufacturing to service, but that transition is unlikely to be rapid or thorough enough that an escalating tariff battle wouldn’t put a serious dent in growth and employment. That said, the very fact that Trump gets elected — if it happens — would deal such a severe blow to American soft power and the Chinese public’s perception of liberal democracy (as Sulmaan notes, Trump does not exactly command “respect” in China, or anywhere else) that it might substantially boost the Party’s sociopolitical popularity, at least in the short term. For the Party leadership, would that be worth the economic downsides? I’m tempted to say no — the party-state’s fundamental claim to legitimacy is, after all, growth and living standards — but the calculus is intriguing.

Jeremy Goldkorn, Co-host and Co-founder of the Sinica Podcast:

The expertise needed for the U.S. to negotiate with China on a range of issues from trade to the South China Sea is vastly more complex than the skills Donald Trump has employed to strong-arm hotel operators into giving him a good deal on operating kitschy hotels, and bargain small subcontractors down on their fees for renovating tacky casinos. Navarro and Trump’s cartoonish idea — that you can swagger into a meeting room with the Chinese government and bully them into a deal that will magically solve every problem globalization has brought — is juvenile and unrealistic.

What the Republican Party needs for China policy is the same as what is needed for dealing with the domestic and global economy, energy policy, foreign affairs, the military, and everything else that government does: not the rejection of specialist knowledge and expertise, but the maximum use of people who actually know what they are talking about.

Dan Blumenthal, Director of Asian Studies at American Enterprise Institute:

Washington’s post-World War II Asia strategy and policy long have been bipartisan endeavors.

Despite the bemoaning of partisan rancor in Washington there is in fact a new emergent bipartisan consensus, just one that internationalists in both parties will not like. The most ascendant and dynamic forces within both parties want to abandon the TPP, do nothing to arrest the downward trajectory of the defense budget, and leave entitlements and the national debt untouched.

This means an even greater share of the overall U.S. budget will be spent on servicing the debt and on entitlements. Discretionary spending, including on the basic tools of statecraft, will shrink even further.

If these trends continue, no matter what aspiring internationalist leaders say, the U.S. will not be able to afford the policies and strategies that have served it well in Asia.

What strategies are we poised to abandon? Since the end of World War II, Republican and Democratic leaders have agreed on several first principles of our approach to Asia.

The first objective is to prevent a hostile hegemon from dominating Asia. The second is to maintain maximum political, military, and economic access to the region. And the third is to build and shape an open political and economic order.

This strategy produced outcomes beyond what post-World War II statesmen possibly could have imagined. More than 70 years hence, Asia has enjoyed great-power peace and an astonishing pace of economic growth and political development.

The United States has been one of the prime beneficiaries of these developments. Precisely because successive presidents maintained forward-deployed military forces and an engaged diplomatic approach, erstwhile enemies have become friends, rivalries have been tamed, and Asia has become the driver of global growth. Moreover, the American homeland has been safe from threats emanating from the Pacific.

China’s resurgence now calls into question this steady and promising Asian trajectory. While China’s embrace of the liberal economic order has contributed to global economic growth, its military modernization and accompanying political assertiveness in Asia undermine the long-term U.S. strategy. And, Beijing’s hegemonic designs are precisely what the founders of America’s Asia strategy sought to prevent.

How will the United States manage China’s revisionism? Republican and Democratic internationalists agree that the three pillars of American post-war strategy should be updated and strengthened, but the core of their parties does not. The current presidential aspirants may not agree on the wisdom of continuing our successful course in Asia but do seem to share a disinclination to pay the necessary costs or convince the American people that trade agreements, an adequate defense budget, and entitlement reform are prerequisites of an activist Asia strategy.

So, perhaps a sharper question for voters in November is this: What is better, minimizing our policy commitments to align them with our declining resources? Or, continuing our rhetorical devotion to a policy we have no intention of paying for? Either choice will hurt America’s security and well-being. The first will recklessly cede Asia to China and the second amounts to a dangerous bluffing strategy that eventually will be punctured. Perhaps a new president will abandon key promises to constituents. If not, one responsible course for internationalists is to start to analyze the commitments we will need to abandon.

Photo by Joe Raedle/Getty Images