America’s China response strategy is ineffective

The US pursued a tough strategy to decouple from China, but ending cooperation with the world’s second largest economy did not bring high results.

The world of 2022 has many similarities with 2008, when Russia conducted a military campaign in Georgia. Tensions between the US and Iran and North Korea have been growing for a long time, while the world faces serious economic challenges.

One notable difference for 2022, however, is the relationship between China and the US. In 2008, the United States and China were still able to cooperate, despite their political and ideological differences, conflict of security interests, and different views on the global economy.

This partnership is now unthinkable, said Henry Paulson, president of the Paulson Institute and served as US Treasury secretary from 2006 to 2009. The Covid-19 pandemic has not brought the US and China closer together, but only increased the confrontation between the two countries. Washington and Beijing criticize and blame each other for policies.

The US is trying to establish a coalition of like-minded countries in Europe and Asia to counterbalance and pressure China, notably the Quartet. But Paulson considers this strategy ineffective, as it hurts both countries in the long run and makes Americans suffer even more.

“It is clear that Washington has interests in cooperating with China in some areas and maintaining a beneficial economic relationship with the world’s second-largest economy,” the expert said.

US President Joe Biden (right) and Chinese President Xi Jinping meet on the sidelines of the G20 summit in Indonesia in November 2022.  Photo: AFP.

US President Joe Biden (right) and Chinese President Xi Jinping meet on the sidelines of the G20 summit in Indonesia in November 2022. Photo: AFP.

He said many US allies and partners share Washington’s stance on China, tightening controls on exports of sensitive technology, scrutinizing Chinese investments, or calling for action to be taken. economic and military pressure on the country. However, even America’s closest partners are not prepared to confront, try to contain or depress China’s economy as forcefully as Washington.

Many countries even go against what Washington wants. Instead of economic decoupling, many countries are tightening their trade ties with China, while still hedging risks by diversifying their business activities, building new supply chains in other countries, and reducing risks. exposure in sensitive areas.

“Perhaps that is why in 2020, despite many warnings from the US, China still becomes the largest trading partner of the European Union (EU). EU exports and imports goods with China. All countries will increase by 2022,” Paulson said.

Washington’s strategy of “restricting Chinese goods” is even less effective in the southern hemisphere. Trade relations between China and Africa hit a record high in 2021, up 35% from 2020.

The campaign to push Chinese tech companies like Huawei out of America’s telecommunications infrastructure has been relatively successful in Europe and India, but has not worked elsewhere.

Saudi Arabia is an example. The country’s biggest trading partner is China, and Saudi Arabia’s Vision 2030 reform plan relies heavily on hopes of partnering with Chinese tech companies, such as Alibaba or Huawei.

Indonesia, the Asian country that Washington wants to woo to counterbalance China’s influence, has actually made Huawei a partner for government systems and cybersecurity solutions.

US efforts may be less effective as China is reopening after nearly three years of implementing a “No Covid” policy. Beijing is countering the US strategy of containment by engaging with more parties than the US, Paulson warned.

China has eased Covid-19 control measures, opened its borders, interacted more with foreign leaders, and sought foreign capital and investment to restart its economy. Last year, President Xi Jinping made his first foreign trip since the outbreak to Central Asia and the Middle East, highlighting China’s strategy of strengthening global connectivity.

“With Mr. Xi traveling the world after a three-year hiatus, bringing new commitments on Chinese investment, infrastructure and trade at every stop, it is Washington, not Beijing, that will soon feel insecure,” Paulson said.

In 2017, President Donald Trump withdrew the US from the Trans-Pacific Partnership (TPP), and six years later, Washington clearly has no intention of rejoining. However, Beijing has applied to join the agreement, now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

China also ratified the Regional Comprehensive Economic Partnership in Asia, applied to join the Digital Economic Partnership Agreement, and upgraded or initiated new free trade agreements with China. countries from Ecuador to New Zealand.

China is currently the largest trading country in the world. Nearly two-thirds of the world’s countries trade more with China than with the United States, according to Paulson.

“Attempts to contain China will certainly hurt China, but they also hurt the US,” he said.

American businesses are at a major competitive disadvantage, and American consumers are paying the price. Observers say that a logical step to overcome this problem is to limit tariffs on Chinese consumer goods, because this is only political and economically meaningless.

Tariff measures hurt China, but also severely affect those that create jobs in the US, including those that depend on Chinese suppliers.

Chinese President Xi Jinping talks with Canadian Prime Minister Justin Trudeau on the sidelines of the G20 summit in Bali, Indonesia.  Photo: Reuters.

Chinese President Xi Jinping talks with Canadian Prime Minister Justin Trudeau on the sidelines of the G20 summit in Bali, Indonesia. Photo: Reuters.

Sharing about how to make the US compete effectively with China, Mr. Paulson said that it is extremely important for Washington to win the races to develop technology and attract talent. Economic success will be strongly fueled by technological superiority.

In addition, the US should set global standards instead of ceding the playing field to China. Washington should take the lead on trade, not pull out of trade agreements China is trying to join, and eliminate opportunities for American workers. Paulson said that the US needs to have a tough but balanced policy, open dialogue with China.

American and Chinese decision makers should meet more often and communicate more candidly, according to Paulson. The former US treasury secretary said that this is an effective way to establish safe corridors for the relationship and promote cooperation in potential areas.

“Some areas of decoupling is inevitable. As in the high-tech sector, some separation will be absolutely necessary. But a complete decoupling from China is pointless,” he said. “Americans benefit from access to the world, and China is a huge market where the US can work together.”

China is the second largest economy and largest producer in the world. The country will remain an important part of the global financial picture for decades to come.

“Instead of building a roadblock between the two countries, Washington should actively negotiate with Beijing to take advantage of opportunities for itself,” Paulson said.

Thanh Tam (Theo Foreign Affairs)

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