The start of a great decoupling of nations?
The US-China split over trade practices could turn into Cold War-style strategy of containing practices that defeat themselves.
This year marks the 30th anniversary of the fall of the Berlin Wall, which led to the collapse of the Soviet Union. The end of the Cold War and of a bipolar world led to a great rush of globalization, with most nations drawing closer together.
This week, however, that rush may have turned to a hush. Three big powers hinted at a potential decoupling from other countries.
In Europe, German Chancellor Angela Merkel said the Continent must “reposition itself” against three rivals, the United States, China, and Russia. “The old certainties of the postwar order no longer apply,” she said.
In Beijing, Chinese leader Xi Jinping told other countries in Asia that they should stick together to write a “new glory of Asian civilizations.”
And in Washington, President Donald Trump imposed his toughest sanctions yet on China over its trade practices, all but excluding any U.S. business with the premier Chinese technology firm Huawei. The ban came only days after new tariffs on $250 billion worth of Chinese goods.
Of the three moves, the most serious is the attempt in the U.S. to disengage from China. The world’s two largest economies have become closely intertwined since the 1990s yet remain far apart on how to run their respective countries. The U.S. accuses China of technology theft, unfair subsidies of exports, and an authoritarian rule that turns workers and companies into government tools of national power.
The new tariffs and other restrictions are designed to change Chinese behavior. Yet they might also become permanent if China fails to change. That is very likely given the Communist Party’s strategic goals for Chinese dominance in certain industries and a historical resentment toward outside pressure.
Last month the U.S. State Department’s director of policy planning, Kiron Skinner, said the administration was coming up with a new defensive strategy toward China, one similar to the containment strategy for the Soviet Union devised by American diplomat George Kennan in 1947.
“In China we have an economic competitor; we have an ideological competitor, one that really does seek a kind of global reach that many of us didn’t expect a couple of decades ago,” said Dr. Skinner.
Today’s China is in many ways different from the Soviet Union. It works within international bodies, for example, even as it tries to change them to its favor. Still, if the U.S. moves to decouple from the Chinese economy and even tries to isolate it, such a policy would be adopting the core idea of Mr. Kennan’s approach.
The Soviet Union, he wrote, was based on flawed ideas, such as a state-run economy. Its system would “eventually weaken its own total potential.” Russian leaders, he said, were “driven by fear or concern for their prestige to do things that are not in their best interests.”
His approach took decades of patient vigilance by the U.S. to succeed. Rather than defeat the Soviet Union, the U.S. in effect followed an old Arab proverb: “Leave evil and it will leave you.”
Many of China’s practices are repugnant to its competitors, not just the U.S. But will boxing in China bring different results than engaging it?
Three decades of globalization may have turned a corner in recent days. Of all the big players, the U.S. and China will determine whether the world splits into regional blocs and defensive postures. Their trade war is about more than trade or even the future of each country. It is about ideas that either work for all or collapse on their own fallacies.