China Today

Let’s see. A chorus of shrieky schoolgirls, many of whose members belong to Congress, is out front and full throated in their denunciations of China. The Evil Empire, Part II, you might say. 

While it is certainly true that China has done some manifestly bad things, it is also true that we are giving as well as we are receiving. If you imagine that we can sanction and tariff the country, attempt to destroy its businesses, trash its reputation in the world press, and expect that it is not going to respond, then you are thinking like a child. Or like a United States Senator.

The tough-guy macho rhetoric about China is obviously a sign of weakness. Back in the day we were told to speak softly and carry a big stick. Now we speak loudly and leave the stick at home. America behavior, as has been widely reported, is belligerent. In truth, it is just a bit too belligerent, as though macho posturing would win the day.

As everyone knows macho posturing signals weakness.

While our political class, a motley crew of misfits if ever there was one, is ranting about China, one remarks that over the past few days Elon Musk and Jamie Dimon and Steven Ratner were traveling to China. Dimon in particular made a point of saying that decoupling the two economies was not going to happen. He added that Chase was in China for the long term. Musk is more than happy with the production at his Shanghai plants. 

People who function in the real world, who have money at stake, are talking a different talk than are our political class.

And, of course, while we are making noise, China is making important inroads in South America. For instance:

For Latin American leaders trying to curb poverty in their own countries, China is a success story. Having experienced staggering economic growth the past four decades, China has brought an estimated 800 million of its citizens out of poverty. The pandemic hit Latin America harder than any other region in the world, and as countries look to emerge from the economic devastation of lockdowns, China offered the trade and investment that Latin American leaders can’t resist. 

Apparently, the United States has been ignoring its Southern neighbors.

Addison Graham continues his essay:

China’s focus on “commercial diplomacy” has been the catalyst for its burgeoning influence  across the Third World, especially in Latin America. China’s middle class drives demand for soybeans from Brazil, beef from Uruguay and Argentina, oil from Colombia and copper from Peru and Chile. Brazil, the region's largest economy, sends 30% of all exports to China. Even countries that would prefer not to be dependent on exports to China don’t see equally profitable alternatives. China buys in bulk.

Chinese companies also sell in bulk, and Latin American leaders see the value of flooding their own countries with low-cost, manufactured Chinese goods such as cars, semiconductors, computers and other technologies that help stimulate economic growth. 

You will be thinking to yourself: But the Uyghurs! And you might notice that not a single Muslim leader in the world cares a whit for the Uyghurs. We are happy to defame China for committing acts of genocide, but this is not the way to make friends in the world.

If you have outgrown your Gordon Chang-level deficient understanding of China, you might find some value in an essay by Steven Ratner. Again, Ratner is a Democrat, for what that is worth, but he is managing money now. People who manage money tend to be more realistic in their appraisals than are members of Congress who are looking for tabloid exposure.

Besides, Ratner’s view is balanced:

On many levels, China is back. Offices were filled with workers putting in their typically long days. Executives mostly radiated optimism about their businesses. A robust pipeline of exciting start-ups suggested China will continue to be a leader in innovation. And the energy and drive that excited me on my many past visits were abundant.

Yes, China has its share of economic challenges, particularly how much President Xi Jinping remains committed to maintaining the country’s progress toward a market economy. Often he seems to put more emphasis on control than on growth. I oversee significant investments in China, and these signals are a cause of concern.

Ratner continues, with his balanced assessment:

More than in the past, Chinese investors and entrepreneurs are carefully noting — and following — every signal from the government and worrying that Mr. Xi might suddenly announce another capricious and unexpected intervention into the private sector. Starting consumer internet platforms has been de-emphasized; investment in new industries such as energy transition and artificial intelligence appears to be the priority.

In at least some of these areas, China has achieved notable success. It controls 77 percent of the world’s battery manufacturing capacity, and last year nearly 60 percent of global electric vehicle sales were in China. The country produces more than 80 percent of the world’s solar panels, American tariffs notwithstanding.

And Ratner concludes, offering policy prescriptions that feel more Republican than Democratic:

China has proved it can continue to grow faster than we do. We need to outcompete the country by raising our growth rate through initiatives like addressing our imprudently large budget deficit and our stultifying rules on the building of industrial facilities.

And we should buttress our human capital by increasing STEM graduates so that we can maintain our technological edge and by restructuring our immigration policies to attract talented people from all over the world and keep our most promising foreign students here.

Most important, we should not delude ourselves with the fantasy that China is going to fall under its own weight. The question, for America and its adversary, is whether this rivalry need be destructive or if a more prosperous, cooperative future is still possible.

It would be an understatement to say that this is a tall order. And yet, Ratner is surely correct to warn us against the Gordon Chang view that China is going to implode. It is an easy way to avoid the hard decisions that will restore America.

For now, we are not winning the race.

Please subscribe to my Substack.