Years ago in Beijing, I interviewed the CEO of a European cleantech company that was then a market leader in China. I asked the leader how he saw the business moving forward, and he said he felt optimistic – the company would be in fourth place in the next five years. I was surprised. Why was the fall from pole position to fourth place good news? And how could he be so specific about the future? Because, the executive told me, that’s what Communist Party leaders told them would happen when local competitors entered the market.
This was one of the many moments over the past two decades that made me wonder why American policymakers and business leaders ever thought that China would simply take its place in the world order and trading system. existing. Why wouldn’t such a great nation, with its own long history, rich culture, unique political system and huge market create its own rules?
He did, of course. Perhaps the only good thing the Donald Trump administration has done economically was to stop pretending that the “one world, two systems” problem did not exist. While the former president lacked a coherent strategy to counter China’s rise to power and his vitriolic rhetoric has not helped America, the past four years have at least put an end to the willful blindness. No matter how tempting the next quarter of growth in the Chinese market might be for business executives, there can be no assurance that the playing field will be level or that the rules will not change at any time – especially in the most areas of the world. strategic and higher. growth sectors.
This is the reality that Joe Biden’s administration must now keep in mind when shaping its own Chinese policy. As a recently Minxin Pei political science professor Put the At a meeting of the Council on Foreign Relations, China’s foreign policy stance towards the United States is based on three things: perceived American decline, perceived opportunities for China’s economic and political development, and President Xi Jinping’s massive ambitions. These points should help inform America’s own strategy towards China.
First, it is important that President Joe Biden keep expectations of cooperation grounded in reality. Xi’s China will not do anything that is not explicitly in the state’s interest. This leaves few overlapping areas of interest for the two countries. The most important is climate change. In an ideal world, American and European technologies would combine with low-cost, large-scale Chinese production to move the world away from fossil fuels.
But we don’t live in an ideal world. Between the theft of Chinese intellectual property, the inability of outside actors to achieve fair market access in higher growth sectors and questionable labor practices, more active cooperation on clean technologies is unlikely. The best that can be hoped for is that both sides agree not to actively undermine each other’s efforts and come together on shared emissions targets and technology standards.
It would be easier if America and Europe had a common approach to Beijing. Failure to convince Germany of its trade sanctions against China was one of the Trump administration’s biggest economic mistakes (and that says a lot). Europe and America share many of the same concerns about Chinese mercantilism, which creates an unfair playing field, and human rights issues.
Europeans are understandably frustrated by the loss of trust and cooperation during the Trump years. But the EU’s recent trade deal with China, which seems blind to incompatibilities between state surveillance capitalism and liberal European-style democracy, is a bad move. The same goes for the new embrace of French President Emmanuel Macron to Russia. Given the historical ties between Europe and Asia, it is easy to imagine closer ties between the two regions. But it will come at a huge cost for the declared values of Europe.
Brussels knows it, and Biden is expected to continue pushing for a reset in transatlantic relations, as well as a “coalition of the willing.” In Asia, countries like India, Australia and Japan could work with the US and the EU to reshape supply chains and downplay China’s influence in Taiwan – where the semiconductors is already a point of conflict – and in the South China Sea.
Perhaps more importantly, America should rise to China’s challenge by building capacity at home – in education, infrastructure, high-growth technologies, and parts of the industrial ecosystem. Manufacturing does not matter as some sort of silver bullet for middle class employment (robots will do more and more factory jobs), but because owning key elements of the commons industry is crucial for innovation. It is telling that China itself is increasingly focusing on maintaining its own manufacturing strategy even as services play a larger role in the economy.
As Biden said at the Munich security conference last month, the United States “will work with Beijing when it is in the interests of the United States to do so”, but “will compete from a position of strength in rebuilding better at home” . The West is not going to reshape China. But that should change the way he responds to the challenge.
Letter in response to this column:
The West risks misinterpreting Xi’s weakness / By Harlan Ullman, Senior Advisor, The Atlantic Council, Washington, DC, USA