US ‘grand strategy’ of shutting out China seems to be working – but to what end?
- A decade ago, John Kerry suggested a polarised US learn from China and boost domestic investment. Instead, Washington chose to target Beijing and stifle its rise
- It may be working – but slowing Chinese growth will cost the US and the rest of the world
When I was living in California in the 2000s, Americans noted that the Spring Festival was the only time when Chinese ports would close and indefatigable Chinese workers would take a prolonged break. Savvy online shoppers put in their Chinese orders well in advance.
That was soon after China joined the World Trade Organization. US-China trade boomed, and the impact on American life was immediate and visible. Shops overflowed with cheap Chinese imports. Americans filled their homes with staples from China. US inflation stayed low throughout the 2000s. Both countries benefited from open trade and investment.
He argued for the adoption of similar strategies of investing in new energy sources, education, infrastructure, technology and research.
Kerry’s advice fell on deaf ears; solving deep-rooted domestic problems takes time and often requires bitter medicine. Instead, Washington’s political elite embraced a revised “grand strategy” towards China, outlined in a report by diplomats Robert Blackwill and Ashley Tellis to the Council on Foreign Relations in March 2015.
The report recommended the adopting of targeted measures to balance “the rise of Chinese power rather than continuing to assist its ascendancy”. Convinced that China’s meteoric rise has benefited from the US’ open markets and advantages in technology, the report recommended a broad range of measures to restrict US trade, investment and tech transfers to China.
Specific proposals include forming trade alliances that exclude China, tightening control of hi-tech exports to China, strengthening the US naval and military presence in the Indo-Pacific, and forming security partnerships with Asian allies.
His administration’s view of China as a rising threat to US global leadership was laid bare in vice-president Mike Pence’s hard-hitting speech at the Hudson Institute in October 2018. In it, he accused China of using its political, economic and military tools to “advance its influence and benefit its interests in the US” – interfering in US politics, contesting US geopolitical advantages and, in essence, changing the international order.
The administration followed closely the measures to stifle China’s growth recommended by Blackwill and Tellis, and took them to a tougher level.
The US’ strategy of consolidating its great power status by shutting out China seems to be working. China’s exports to the US dropped by 8.5 per cent in the first five months of this year with the trade surplus also narrowing by 14.5 per cent year on year.
Stifling trade, investment and China’s access to advanced technology is not helping the US to solve its myriad domestic problems, including one with vast global implications: its humongous fiscal imbalance.
US national debt is forecast to rise from 98 per cent of its gross domestic product this year to 195 per cent by 2053. China’s slow growth will affect the US and the rest of the world; given the vast US fiscal imbalance and a drying up of savings, it could easily trigger another global financial crisis.
Regina Ip Lau Suk-yee is convenor of the Executive Council, a lawmaker and chairwoman of the New People’s Party