Divorce With Chinese Characteristics

In his latest New York Times column Tom Friedman expresses concern about the upcoming messy “divorce” between China and the United States:

But while China may think it has nothing to fear and much to gain from a Trump victory over Joe Biden, the real U.S.-China story should be cause for alarm in Beijing.

The real story is that China’s standing in America today is lower than at any time since Tiananmen Square in 1989. The real story is that if China was to buy a few more beans and Boeings from America, that would not fix Beijing’s problems here. The real question the Chinese should be asking themselves is not who will be America’s next president, but rather: “Who in China lost America?”

Because the real story is that the U.S. and China are heading for a divorce.

As you might expect from Mr. Friedman it will be a “no fault divorce” or, more precisely, a “both parties are at fault divorce”. China’s “overreaching”, as he puts it, is a matter of record. But it’s our fault that we “underperformed”:

But if China has increasingly overreached, America has increasingly underperformed.

It is not just that China reportedly has fewer than 5,000 COVID-19 deaths and America has over 120,000 — and the virus started there. It is not just that it takes about 22 hours on Amtrak to go from New York to Chicago, while it takes 4.5 hours to take the bullet train from Beijing to Shanghai, slightly farther apart. It’s not just that the pandemic has accelerated China’s transformation to a cashless, digital society.

It’s that we have reduced investments in the true sources of our strength — infrastructure, education, government-funded scientific research, immigration and the right rules to incentivize productive investment and prevent excessive risk-taking. And we have stopped leveraging our greatest advantage over China — that we have allies who share our values and China only has customers who fear its wrath.

If we got together with our allies, we could collectively influence China to accept new rules on trade and COVID-19 and a range of other issues. But Trump refused to do so, making everything a bilateral deal or a fight with Xi. So now China is offering sweetheart deals to U.S. and other foreign companies to come into or stay in China, and its market is now so big, few companies can resist.

I don’t believe I have ever seen such a strenuous attempt at comparing apples and oranges. How in the world do you compare mortality statistics from a closed society like China’s to those in an open one like ours? Especially when China counts COVID-19 cases differently than we do? Additionally, even the Chinese authorities have been saying lately that the strain of COVID-19 that the U. S. has been facing is different from the one they faced back in 2019.

Or this one:

It is not just that it takes about 22 hours on Amtrak to go from New York to Chicago, while it takes 4.5 hours to take the bullet train from Beijing to Shanghai

Do you know anyone who’s traveled from New York to Chicago by rail in this century? Me, neither. It would take a real train nut to do so. Emphasizing air transport for passengers and highway travel for freight is a decision we made a half century ago. Just for the record it takes about two and a half hours to fly from New York to Chicago and about 12 hours to drive there (compared with about 13 hours to drive from Beijing to Shanghai).

And are these:

infrastructure, education, government-funded scientific research, immigration and the right rules to incentivize productive investment and prevent excessive risk-taking

really the “true sources of our strength”? I would be more likely to point to a stable currency, the rule of law, a large internal market, and confidence in the fairness of the system, all of which are under attack. But even if his list were true there are problems with his views.

We already spend more on infrastructure, education, and scientific research in absolute dollars than any other country in the world. Our government spending as a percentage of GDP may be less on these things than some other countries but when you add public and private you get a different picture.

Take education for example. Our governments at all levels spend about 4% of GDP on primary, secondary, and tertiary education which puts us in about the middle of the pack among OECD countries. But when you add private spending to the mix, it puts us over 6% which is more than most other countries. And, of course, that’s as a percentage of a much higher GDP. It’s basically the same story as with roads or our military. Not only do we spend more, we spend more than most other countries put together. We’re just not getting value for what we spend.

And our issues with our “allies” preceded Trump by decades. We have clients and competitors but very, very few genuine allies.

I have thought our marriage of convenience with China has been a bad idea for decades. And, yes, it will be a costly and painful but necessary breakup. You know what they say. Marry in haste…