How Democrats Can Get Tough on China—Without Imitating Trump
The current White House has legitimate concerns but counterproductive solutions.
Whatever U.S. President Donald Trump is for, Democrats are against, and vice versa—that’s a pretty good rule of thumb in the U.S. foreign-policy debate today. For example, the more Trump aligns himself with the positions of Russian President Vladimir Putin, Saudi Crown Prince Mohammed bin Salman, or Israeli Prime Minister Benjamin Netanyahu, the more vocal Democrats have become in their criticism of those leaders. Conversely, the more Trump attacks NATO, financial assistance to Central America, or former President Barack Obama’s Iran nuclear deal, the more enthusiastically Democrats seem to support them. The substantive differences are genuine, but they are magnified by the politics of opposing Trump.
A glaring exception to the rule, however, appears to be U.S. policy toward China. Far from distancing themselves from Trump’s confrontational, populist approach, many Democrats— especially candidates for the 2020 presidential nomination—appear tempted to echo it. Sen. Elizabeth Warren, for example, said that China had “weaponized its economy” and complained about “misdirected” previous presidents telling a “happy-face story [on China] that never fit with the facts.” Sen. Cory Booker called the Chinese government a “totalitarian regime” that has been “taking advantage of this country” and said, “We need to fight them.” On June 11, South Bend Mayor Pete Buttigieg joined the fray, calling China’s ideological model “the perfection of dictatorship” and admitting that “there’s something about [Trump’s] orientation on China that I think is not completely wrong.”
When former Vice President Joe Biden, the current democratic front-runner, recently challenged the notion that China was going to “eat our lunch”—an apparent attempt to express confidence in U.S. workers—he found himself under assault from Trump and Democrats alike and quickly retreated, saying, “We are in competition with China” and “need to get tough.” In the Senate, Minority Leader Chuck Schumer and other leading Democrats have called on the administration to “stay aggressive” in trade negotiations. When Trump recently threatened to escalate tariffs on China as part of his trade war, falsely claiming that China was bearing most of the costs of the tariffs, Schumer not only declined to correct him, but also tweeted, “Hang tough on China, President @realDonaldTrump. Don’t back down.”
Democratic critiques of China are not just based on politics or presidential ambitions, and Buttigieg is not wrong to say that Trump raises legitimate concerns. Democrats have themselves been critical of Chinese trade, foreign-policy, and human rights practices for years, rightly so, and in many ways China’s behavior is getting worse. China has failed to fulfill the 2015 promise it made to Obama to stop stealing U.S. intellectual property, and its policies of forced technology transfers and massive state subsidies continue to distort international trade, often to the detriment of U.S. firms. China continues to aggressively pursue contested territorial claims in the South China Sea, bully Taiwan and Hong Kong, unjustly detain foreign citizens as leverage in diplomatic negotiations, deny rights to the peoples of Xinjiang and Tibet, and increase domestic repression and surveillance—while exporting repressive techniques and technologies abroad. These practices all threaten important U.S. interests and values and deserve a serious and vigorous U.S. response.
But to identify the right problems is not the same as proposing the right solutions, and that’s where Democrats would be wrong to fall into the trap of embracing Trump’s approach. Indeed, after two and a half years in office, it is becoming clear that Trump’s policy of demonizing China, imposing unilateral tariffs, and seeking to decouple the U.S. economy from Chinese investment and technology is deeply misguided. It is not leading to the positive changes he seeks but instead to mounting costs for Americans and a strained relationship with an increasingly nationalistic China that could turn into a costly new cold war.
On a trip to Beijing and Shanghai last week with a small group of Democratic foreign-policy specialists, I found Chinese officials and experts increasingly convinced that Trump had been captured by hard-line, anti-China voices within his administration with whom no compromise is possible. Believing Trump wants to run for reelection in 2020 as the president who finally stood up to Beijing, they no longer believe a trade deal is likely and are gearing up their population to resist U.S. pressure—narrowing their own room for compromise in the process. After some hesitation (or at least gamesmanship), Chinese President Xi Jinping has agreed to meet with Trump later this week at the G-20 summit in Osaka, Japan, but the Chinese do not expect him to make the major concessions demanded by Trump—nor, despite China’s own interest in a trade deal, do they seem to want him to.
For Americans, the costs of Trump’s approach are already high and, if Chinese pessimism about the prospects for a deal is right, likely to rise further. Tariffs on hundreds of billions of dollars of imports from China have raised U.S. prices on washing machines, solar panels, electronics, furniture, and business equipment, with higher prices for shoes, clothes, toys, and other consumer goods soon to come. Meanwhile China’s retaliatory tariffs on U.S. agricultural goods have been devastating to U.S. exporters, which are losing markets for goods such as soybeans and seafood, with a growing risk that they will never get these markets back. U.S. taxpayers have already footed the bill for some $28 billion in subsidies to compensate those farmers for the goods they can no longer sell, a tab that will surely rise if a deal is not reached soon. So far, a relatively narrow range of U.S. workers and producers—ironically, mostly in states and sectors that supported Trump—have borne these costs, but the longer the trade war continues, the greater the risk that it will affect the economy as a whole. According to Kenneth Jarrett, a former president of the American Chamber of Commerce in Shanghai now with the Albright Stonebridge Group there, U.S. companies doing business in China are starting to implement plans to adjust supply chains and move production and procurement elsewhere to avoid the tariffs Trump now says could be permanent. And they are moving their production mostly to places like Southeast Asia and Mexico—with only 6 percent of them considering relocating to the United States, according to a recent survey. The sharp decline in the May jobs report and the Federal Reserve’s recent signals that it may have to cut interest rates this summer were ominous signs that U.S. employers and central bankers are starting to expect the trade war will hurt the wider economy.
Instead of following Trump down this costly and counterproductive path, Democrats should embrace an alternative approach, the first step of which would be to join forces with key global partners to form a common front. Instead of imposing unilateral U.S. tariffs on close allies as well as on China, Democrats should propose working with those allies—including Australia, Canada, Japan, Mexico, and South Korea, along with Europe—all of which share U.S. concerns and interests, to confront China together. In an integrated global economy, China can easily get around unilateral U.S. tariffs by selling products in other markets, which is exactly what it is doing. Indeed, according to a recent study by Chad Bown, Euijin Jung, and Eva Zhang of the Peterson Institute for International Economics, China has actually reduced its tariffs on non-U.S. goods since the trade war began by an average of about 14 percent—a boon to Chinese consumers, Brazilian and European farmers, and Canadian fishermen, but not so great for U.S. workers. A united international front, however, would boost U.S. leverage immeasurably and force China to adjust.
An essential part of this global approach would be to use and strengthen the World Trade Organization, rather than gutting it, as Trump seems intent on doing. Historically, the United States has won the vast majority of cases it has brought to the WTO, yet Trump has only bothered to bring two new cases against China in two and a half years and has blocked the reappointment of judges on the WTO’s dispute-settlement body, threatening its effectiveness. Just last week, in fact, China had to accept the reality that it was going to lose a WTO case arguing that it should be treated as a market economy, a step that would have limited the ability of other countries to respond to Beijing’s dumping of goods at below-market prices. To the extent that the WTO is ineffective—its dispute resolution mechanism is often too slow, for example—the United States should be pressing to fix it, not walking away.
Democrats should also distance themselves from aspects of Trump’s approach to the challenge posed by Chinese technology firms such as Huawei. Cybersecurity concerns about a company so close to the Chinese government are certainly legitimate, and if the U.S. intelligence community genuinely determines that Huawei infrastructure would put future U.S. 5G telecommunications networks at risk, the United States should exclude it and press allies to do the same. But the administration’s separate decision to put Huawei on the Commerce Department’s so-called Entity List, banning U.S. firms from supplying it with components, is counterproductive. Not only is the move seen in China as a deeply hostile act—a “death sentence” meriting potential retaliation, according to Chinese officials and scholars we spoke to—but it will also likely end up hurting U.S. suppliers almost as much as Huawei, leading China to get its components elsewhere or to make them domestically.
An alternative to a blanket ban on Huawei products would be support for strengthened legislation such as the Deterring Espionage by Foreign Entities through National Defense Act, which provides for targeted sanctions against entities or individuals who steal secrets from U.S. firms and imposes tougher penalties on cybercriminals. And if Huawei has an unfair competitive advantage because it benefits from state subsidies, which it almost certainly does, the better response is international action through the WTO, which would allow the United States and others together to retaliate until those subsidies are reduced.
Democrats should also refuse to endorse Trump’s apparent decision to start keeping Chinese students out of the United States. At Shanghai’s Fudan University last week, we heard complaints from faculty about numerous student visas being denied or delayed, a trend consistent with Bloomberg’s reporting that the rate of visa rejections in the first three months of 2019 was 13.5 percent, compared to 3.2 percent last year. Chinese military and industrial espionage is a serious concern, but keeping Chinese students out of the United States is not the right way to deal with it. No foreign students should be working on sensitive military areas in any case, but better background checks and vigorous prosecution of anyone caught spying are better remedies than a blanket rejection of Chinese talent. To the extent that Trump’s student visa policies are designed to prevent China from acquiring scientific knowledge, the reality is that if Chinese students are kept out of the United States, they will simply study in Australia, the United Kingdom, Canada, and Germany, all of which will benefit from their scientific contributions, and in many cases from their eventual citizenship. Education for foreign students is actually one of the United States’ largest export markets, accounting for some $39.4 billion in foreign spending on goods and services such as rent, clothing and food, in contrast to the $7.6 billion U.S. students spent abroad. Keeping Chinese students out thus cuts into one of the few sectors where the United States actually runs a trade surplus with China.
Most importantly, Democrats should focus on building the United States’ own strength and competitiveness—the only real way to meet the China challenge. This means significant additional spending on education, basic scientific research, transportation and telecommunications infrastructure, and health care and training programs so U.S. workers can better withstand the inevitable shocks of global economic integration. It also means repealing Trump’s trillion-dollar tax cut for the wealthiest Americans, which has exacerbated the budget deficits that are more responsible than anything else for the trade gap with China. All the tariffs in the world will not reduce that trade gap so long as the United States is borrowing money from China and elsewhere to finance that deficit, driving up the dollar and making U.S. goods expensive relative to Chinese products.
Some might say that even if all this is good policy, it could be bad politics, and if Democrats have to demonize China in order to win an election, so be it. But while nothing is more important from a Democratic perspective than beating Trump, it is not clear that his approach will pay off for him politically once Americans begin to feel the full costs of it. If there is one virtue in Trump’s trade policy, it is that it appears to be reminding Americans how much they actually benefit from trade. According to polls conducted by the Chicago Council on Global Affairs, American support for international trade has risen the past two years, and a record number of Americans now believe trade is good for the U.S. economy, consumers, and jobs, while only four in 10 Americans think reducing the trade deficit is a very important priority. Even before the recent escalation with China, seven in 10 Americans were very or somewhat concerned that a trade war with China would hurt their local economy, and more than 60 percent even now want to see the United States join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the trade agreement formed among 11 Pacific countries when Trump withdrew the United States from the original Trans-Pacific Partnership. So far, Trump voters appear to be sticking with him even as they pay the price of his policies, but if his failure to strike a trade deal starts to hit the overall U.S. economy, his China policies will be a political vulnerability, not a strength—and Democrats should want nothing to do with them.
A rising and expansionist China that doesn’t play by the rules is a major threat to U.S. interests, and Democrats should not hesitate to support the Trump administration when it calls China out for misbehavior or proposes sensible measures to deal with the threat. But they should also not hesitate to distance themselves from the administration when its approach is misguided—or to refrain from cooperation in areas such as climate change, counterterrorism, or dealing with pandemics—just to avoid appearing soft. Democrats need to get tough on China, but they also need to be smart and effective. And in this case, the good policies may well turn out to be good politics as well.