Welcome to Transpacifica Issue 7. One big thought this week, as it appears more and more reasonable to say the United States has started a “trade war” with China with no end in site and no clear ends to the means. Relatedly, check out ChinaFile’s Conversation, including myself and a great group of careful thinkers about how U.S.–China technological competition should shape up. –Graham Webster
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After U.S. Kicked Away the Ladder, China Found Another Summit to Climb
When historians chronicle the Trump administration’s decision to launch tariffs against China and the world, they will debate relatively coherent narratives about how today’s reality came about. They’re unlikely to capture fully the degree to which chaos and conflicting policy and economic drives led to the present. Though the chaos is relatively easy to describe (Trump’s election was unexpected, and his economic advisers are quite visibly divided), the conflicting drives are just coming into focus. They are as much ideational as factional, they often play out within a single mind or boardroom, and I can identify at least three:
First, the drive to kick away the ladder. “It is a very common clever device that when anyone has attained the summit of greatness, he kicks away the ladder by which he has climbed up, in order to deprive others of the means of climbing up after him,” a German economist wrote in the late 19th century (quoted by Ha-Joon Chang, in the 21st century, critiquing hegemonic development economics). Some U.S. policy efforts have, intentionally or not, worked to deny China the flexibility of tools for development that the United States enjoyed, instead advocating a global market system with rules against various kinds of industrial policy. Whether or not you subscribe to Chang’s critique of free trade ideology, it is clear that the U.S. government has at times kicked away the ladder, arguing that other more beneficial ways exist to climb and are better for all.
Second, there is a more pragmatic drive, recognizing that the rules are not omnipotent but finding that profit is to be made in navigating around or complying with some of the practices the ladder-kickers decry. This drive, embodied in countless companies who chased Chinese customers and whose deals represented mutual interests in stable bilateral ties, long helped constitute the old U.S.–China relations cliche of a “ballast” in the relationship. The same businesspeople who constituted this ballast also, at times, advocated ladder-kicking for competitive advantage; if China would follow the rules, they could profit more. But one could muddle through nonetheless.
A third drive, long relatively dormant, grew out of a double standard—that the rules seemed to apply to U.S. economic actors but not to their Chinese competitors. For business, this was sometimes an acceptable frustration so long as profits were still available. For workers who lost out to globalization and automation, the double standard was an outrage—even if the rules had no chance of restoring their losses. And for those who see economic advancement as an input into an eventual military clash, losing ground to China in aggregate (even if, per capita, the United States still enjoyed its “summit of greatness”) was unacceptable and demanded action.
It is the third drive—the double standard—that most animated the Trump administration’s actions, and it would have played a role in a Clinton administration as well. Still, the first and second drives have not disappeared, and the conflicts among them now cause trouble. Counteracting a double standard in how the rules apply naturally called for old tools such as industrial policy or protectionist measures—but since the United States largely kicked away that ladder in favor of free trade, these tools conflict with powerful rules and norms. Improvising a new ladder to address the double standard also upsets the the still-existing mutual interests in stable bilateral ties, adding market uncertainty and promising certain Chinese retaliation.
The ladder metaphor is ultimately both helpful and misleading, in that it highlights a troubled assumption held by many at various times—that the United States occupied a “summit of greatness” that China sought to climb. While we all occupy the same earth and the same global economy, the reality all along has been that China and its people have walked a separate path, one with a different ladder, different pitfalls (missing rungs?), and a different vision of the unseen summit. At a time when the U.S. government scrambles to reassemble a ladder below, U.S. thinkers across the political spectrum seem to have lost the habit of gazing upward and into the distance in search of a higher summit.
The Transpacifica newsletter is produced by me, Graham Webster, a senior fellow with Yale Law School’s Paul Tsai China Center and fellow with New America, where I am coordinating editor of the DigiChina project, working from a home base in Oakland, California. The opinions expressed here are my own, and I reserve the right to change my mind. For three years and 131 issues after its founding in February 2015, this newsletter was known as U.S.-China Week. It now appears biweekly, delivered by free e-mail subscription.