Rana Foroohar argues that the U. S. needs a new trade policy in her column at Financial Times. She distinguishes between two “teams” within U. S. foreign policy circles:
The first, Team Status Quo, is heavy on state department and commerce types. They want to believe that we can somehow travel back to the 1990s, a time of wilful blindness about a “one world, two systems†model in which China and liberal democracies would co-operate to their mutual benefit despite maintaining fundamentally different political and economic systems.
The second, Team New Rules, includes Katherine Tai, the US trade representative, as well as other administration officials interested in labour, climate and long-term security issues. They have a more realistic approach, grasping that even if the US wanted to go back to a neoliberal trade approach that prioritised market access for big companies over better wages, the ability to make crucial products or the protection of the planet, China is going in another direction.
What is that direction?
Beijing’s so-called dual circulation plan is a decisive step away from World Trade Organization rules and multilateral agreements orchestrated by technocrats from the US and Europe. It prioritises self-reliance, indigenous innovation and the use of all strategic resources to shape a world where the US no longer calls most of the shots. That means settling more trade deals in renminbi, the better to reduce the financial leverage that the dollar gives the US. It also involves weaponising supply chains — various legislative loopholes in the US still allow states and companies to source supplies such as personal protective equipment from China.
Sadly, she does not venture an opinion on what that change should be. I infer that she leans towards “Team New Rules”, particularly from her observation that Team Status Quo is obsolete. My own preference with respect to China would be one of reciprocity. To whatever extent China imposes quotas or other resrictions on U. S. goods or services, we should impose quotas or other restrictions on Chinese goods or services. To the extent that China provides preference and support to its own companies, we should provide preferences and subsidies to our own. And so on. That, of course, would be enough to make the heads of Team Status Quo spin and cause them to spit pea soup.
David Goldman at Asia Times points out that China has committed to using AI/5G to greatly enhance its already highly advanced manufacturing sector. This will raise the bar very high for re-shoring US industry.
In their last general meeting, the CPC made improving the conditions of China’s remaining 600 poor. There seems to be move there for economic autarchy. An inward focus.
By the way, Argentina just became the 140th country to enlist in OBOR. They also got an almost $24 billion from China, which might be used to pay off some of their $44 billion IMF loan. Argentina also supported Cina’s claim to Taiwan, and in return China supported Argentina’s claim to the Falklands/Malvinas. China has done that previously, too, but the heat on Britain has been turned up a notch or two.