It looks like China’s leaders have been swallowing a lot of their own propaganda about its rise to global prominence and its place in the world economy in particular. And since his election as president a week ago, these delusions of grandeur have surely been fed by tremulous predictions by the usual globalization cheerleaders that the United States – or at least many Americans – will lose big in any bilateral trade war Donald Trump might start.
How else to explain the warning issued by a state-run Chinese newspaper on Sunday that any Trump tariffs on Chinese goods will be met with a “tit-for-tat” response that would include the following consequences:
“A batch of Boeing orders will be replaced by Airbus. U.S. auto and iPhone sales in China will suffer a setback, and U.S. soybean and maize imports will be halted. China can also limit the number of Chinese students studying in the U.S.”
And how Beijing must have chortled today when it read Wall Street Journal columnist Andrew Browne’s argument that
“Nobody wins in a trade war. If Donald Trump sparks one with China, among the losers will be some of his most ardent supporters: blue-collar workers who helped sweep him to election victory.
“In fact, they’ll stand to lose twice. They’ve already endured stagnant incomes for decades amid withering trade competition from China. Mr. Trump’s threatened tariffs of 45% on all Chinese imports would hit their pocketbooks again by raising the price of pretty much everything on sale in Wal-Mart, from sneakers to microwave ovens.”
“In fact,” if the Chinese newspaper writers really are reflecting their political leaders’ views, then their grip on reality is totally gone. For example, will the United States really be the only country that suffers if iPhone sales in the PRC are limited? Last I checked, nearly all these devices were assembled in China, where Apple and especially subcontractors are mass employers. Further, the Chinese content of manufactured goods across-the-board keeps rising, so Chinese workers across long domestic supply chains would be hit as well.
And limits on Chinese students in the United States? Is that a promise or a threat? First of all, for all of its recent advances, China still lags far behind America in terms of science and technology. China’s therefore clearly the big loser if Beijing denies its people access to that knowledge. Second, if China’s higher education system was such great shakes, why would the country’s plutocrats be so anxious to send their kids of American colleges and universities? Third, as Beijing knows best of all, many of the students it sends here are spies. Like it’s going to cut off such intelligence collection voluntarily? Finally, as I’ve written, as Chinese students have flooded into American education, so have China’s corrupt values.
More important, let’s not forget the broader economic context. Although it’s down some since 2015, China is still on course to run a nearly $350 billion trade surplus with the United States this year. And not only is trade more crucial to China’s growth than it is to America’s (and more important than official figures indicate), but that growth in turn is vital to China’s stability – and to the personal fortunes of its dictators and oligarchs. So could we please stop with the claims that these same Chinese leaders are going to launch a commercial attack on its top customer on net by far?
And when it comes to individual contracts, it’s not like the United States lacks options with other countries that would be tempted to seize the opportunity to replace American producers in the ranks of exporters to China. For most of these countries depend heavily on the U.S. market, too. Washington would have ample power to tell them credibly, “If you abet China’s retaliatory tactics, you can forget about trading with us.”
China of course is not devoid of clout. But it clearly still has much less than America’s. Here’s hoping a canny negotiator like President-elect Trump truly does recognize the real balance of global power, and moves vigorously to capitalize on America’s advantages while they last.