Much More Than a Trade War with China

BRANDON J. WEICHERT | NEW ENGLISH REVIEW

The United States is in the midst of a trade war with the People’s Republic of China. Many proud members of the American Democrat, globalist, Western elite are disgusted by what they perceive as the Trump Administration’s desire to push China on what Trump has correctly identified as grotesquely unfair trade practices by China. Considering that many Western elites are now fabulously wealthy, thanks in large part to their undying support for “free” trade with China, this anger shouldn’t be surprising. There should be no expectation that these Western elites, having benefited so long from business-as-usual with China, will change their opinions on this matter. The disruption in trade relations between Beijing and Washington is often presented by the American press as an anomaly that will go away—particularly as American farmers and other members of the Trump coalition, as claimed by the press, are harmed by this trade war. Do not listen to these “experts.”   

Trump and his supporters have honed-in on the fact that China has brazenly abused and misused us. In fact, we have not been engaged in true “free trade” with China wherein the Chinese get some benefits but so, too, does the United States. The relationship has been entirely one-sided. Yes, the West received some cheap consumer goods from China over the years. But China was able to learn from, pilfer, and replicate (at lower costs) American industrial practices. In so doing, China created entirely new industries in their country that ultimately compete with American companies and eventually posed grave national security threats to the United States. In other words, China has been engaged in an unremitting economic war against the United States since Deng Xiaoping, the man who succeeded Mao Zedong, opened China to Western trade.  

As you will see in the paragraphs below, China’s ancient culture developed and perfected techniques for both controlling their own unruly populace and also handling foreigners whom they deemed to be “barbarians.” These “barbarian-handling” techniques are not only about conflict on the battlefield. In fact, they tend to focus on what Thomas J. Wright has dubbed, “all measures short of war.” One cannot assess the ongoing trade war solely in the context of economics. Instead, the trade war must be understood more accurately as a result of China’s aforementioned economic war against the United States—and that economic war is a classic Chinese tool for defeating technically superior foes, such as the United States, over the long-term.  

Chinese actions today mirror those dating back 4,000 years, when the Shang Dynasty—China’s first major dynasty—rose to prominence thanks to totalitarianism and imperialism. By assessing these basic patterns over the course of thousands of years, then, one can see how China has identified the United States as a major threat to be toppled. And, it is also why the United States cannot compromise with China in the ongoing trade war—no matter what Beijing offers. For, if the Trump Administration makes a deal, the Chinese will continue their aggressive assault on the American economy—moving from the manufacturing sector to the higher-paying innovation sectors (they already are).  

Unlike the United States, China desires to not merely exist as a preeminent power in an anarchic international system. Instead, they view the United States as the hegemonic global power. Such a global power threatens Chinese state security and, as such, China’s leadership cadre believes that they will only be safe if the American hegemon is dismantled and eventually replaced by themselves.

The Chinese system, while painfully repressive and undemocratic, has certain advantages. Namely, the small coterie of Chinese elites who’ve ruled the country for decades under the imprimatur of the Chinese Communist Party (CCP) has the capability to craft long-range strategies and programs for realizing their ultimate goal of becoming the global hegemon. Obviously, such rigid thinking has its downsides and the freewheeling American style of strategy and policymaking has its own merits (namely in the form of adaptability). Yet, unlike the Chinese, until very recently, the United States has gone for decades without the kind of strategic leadership necessary for competing against a rising juggernaut like that of the People’s Republic of China.   With China’s decades-long economic war against the United States—what amounts to a sustained, new age, piratical raid upon the United States’ most lucrative, strategic industries—merely being a small part of a larger strategy of defeating the United States, the US must craft effective responses. China’s long history is replete with examples that illustrate how the present Communist dynasty in Beijing plans to overcome American strategic advantages.   

From its beginning as a backwater, agrarian, Communist state in 1949, the CCP has pushed China to become first a regional powerhouse in Asia. Then, its leaders envisioned becoming not only a dominant force in Asia, but also a maritime power capable of competing with the United States at sea. Next, China’s leaders desire to best the United States in the high-tech innovation sectors. From there, China has striven to spread its influence to the farthest reaches of the Pacific Ocean as well as the Indian Ocean and beyond in the form of its illegal island building initiatives in the South China Sea; its unlawful declarations of Air Defense Identification Zones in the East China Sea; its threats of invasion toward Taiwan (all as a means to inevitably threaten Japan); and its ongoing desire to link all of Eurasia together through its One-Belt-One-Road Initiative.  

Underscoring this new threat to the United States is the fact that the Sino-American economic relationship—what was once dubbed “Chimerica”—has essentially fueled China’s rise and allowed them to feed their hegemonic appetite. Rather than being some new threat, though, China is merely replicating its historic behavior. This is why the threat will not end and why the United States and China are destined for conflict.  

China In the Beginning  

Every country is influenced by a cultural narrative that can be traced back through history. This primordial tale, what the great mythologist Joseph Campbell referred to as the “Ur-narrative,” is a foundational explanation for why a country came to be and what makes it a unique place. For China, which has existed in some form since the Shang Dynasty of the Yellow River region in northern China came into being around 1600 B.C., the ur-narrative is especially strong. In fact, it is so powerful that, despite having been conquered several times in its long history, China’s underlying cultural preferences never eroded. These socio-cultural and political predilections were first experienced during the Shang Dynasty and reinforced across thousands of years, by various other ruling dynasties—including the present ruling dynasty of the Chinese Communist Party (CCP).  

Essentially, the Chinese Ur-narrative is based on the concept of Tianxia, the “All under Heaven.” Zhao Tingyang, a distinguished academic at the Institute of Philosophy of the Chinese Academy of Social Sciences in Beijing (a Chinese government-funded entity) describes the tianxia as a concept relating to “the earth or all lands under the sky; a common choice made by all peoples in the world, or a universal agreement in the ‘hearts’ of all people; and, a political system for the world with a global institution to ensure universal order.” Zhao argues that in the Chinese conception, the world is the most important political unit (whereas the West views the nation-state as the most important political unit). Further, a central theme to the tianxia system is that it excludes “nothing and no one.” Zhao believes that Western analysts mistakenly assume that totalitarianism resides at the heart of the tianxia concept. While Zhao is probably correct in stating that not all Chinese seek to establish China as the geopolitical center of the world—the hegemon, or ba—because, to these Chinese, tianxia is more of a metaphysical ideal rather than a political tool, the fact remains that the tianxia concept has historically been used by Chinese leaders to justify repression at home and aggression abroad.  

At its core, the narrative is a totalitarian one forged by China’s earliest rulers. The emperors of the Shang Dynasty crafted China’s basic worldview some four-thousand years ago. Since its beginning, China’s rulers have been obsessed with bringing a chaotic and barbarous world to order through the civilizing effect of Chinese rule. In bringing chaos to order through absolute Chinese rule, China was ensuring that it would be the world’s hegemon. During the Shang Dynasty, its leaders espoused the need for the “Great Unity,” or the requirement for the Chinese state to squelch any opposition to its rule, thereby ensuring China’s hegemony. The Shang Dynasty was notably ruled by an autocrat who routinely referred to himself as “I the single one man” in public.  

During this period, the rulers of the Shang Dynasty governed along an ethos of strict Legalism which effectively demanded totalitarian central authority. Later rulers would drape this Legalist style of rule in the trappings of pacifistic Confucianism. China’s rulers, whether the ancient emperors or the modern-day ones of the Communist Party, have long governed according to the absolutist and draconian Legalist tenets.  

The Zhou Dynasty, which succeeded the Shang, expanded on the authoritarian traditions of its leaders. “All under heaven belongs to the King, and all people on the shores are subjects of the King,” says the Zhou-era Book of Odes. It was here that the Chinese emperors gained their god-like status in Chinese civilization. From 1027-249 B.C., the Zhou kings committed their dynasty to the creation of one of the most complex bureaucracies in history—all intended to usurp the power of local feudal lords and to place as much power in the hands of the emperor and those loyal to him in the capital.  

With the Chinese belief in the “All Under Heaven” concept, and given that Chinese emperors were believed to possess the “mandate of Heaven,” order and unity radiated outward from the emperor, the center of Chinese power, and toward the farthest edges of the map. All of the world fell under the control of the Chinese emperor and all had to pay tribute to the emperor as a symbol of his supremacy. Those farthest removed from the emperor’s power were considered barbarians. In the eyes of the Chinese, inevitably, all would be subordinated to the will of the all-powerful emperor and his potent, centralizing bureaucracy. Thus, going back to antiquity, the borders of China were fungible; always waiting for China to gain the strength needed to push to those farthest edges of the world map and bring barbarianism and chaos to civilized order.  

It’s Not Thucydides, Stupid! It’s the Warring States Period.  

The Harvard international relations scholar, Graham Allison, has conducted some groundbreaking research on historical conflict. He and his team at Harvard looked at major wars throughout history and determined that some of the greatest conflicts of all time occurred between a status quo power on the decline and a rising power seeking to rewrite the international system to better comport with their needs and interests. At some point, the declining power and the ascendant one reach relative equilibrium in terms of relative power and conflict ensues. Allison has dubbed this the “Thucydides Trap.” It’s an interesting case and the research is compelling. Allison’s work has taken the Washington, D.C. policy community by storm—particularly the more hawkish elements who are advising President Trump on U.S. foreign and trade policies toward China.  

Graham Allison’s Destined For War, is a fine book. Yet, as the preeminent China scholar, David C. Kang, has long advised audiences: don’t apply Western case examples onto China, a country with a rich 4,000-year history (most of which occurred without much interaction with the West). Allison refers to his thesis as the “Thucydides Trap.” This is a direct reference to the Peloponnesian War which was fought between the maritime Greek city-state, Athens, and the oligarchic Greek city-state Sparta (and its allies who comprised the Peloponnese League). At that time in Greece, Sparta was the established status quo power and Athens was on the ascendance. Sparta was troubled by the growing power—and what they perceived as the radicalism of Athenian democracy—compared to the declining militarism and oligarchy that had defined Sparta for centuries. Ultimately, the two powers engaged in a decades-long conflict that resulted in Athens being destroyed by Sparta.  

It is easy for Western policymakers to conceptualize the current conflict with China in terms of the Peloponnesian War. After all, it was a Western conflict. Although, Chinese policymakers are not Westerners. Just as American policymakers draw on Western history and literature for comparisons and inspiration, the Chinese leadership looks upon their own country’s rich history for comparative analyses. In the case of their relations with the United States, within the framework of the Westphalian nation-state international order, most Chinese conceptualize the world as being roughly akin to the environment that China found itself in during the Warring States Period.  

This was the era that lasted from (771-476 BC) and saw the sweeping away of the once potent Zhou Dynasty and the rise of the Qin Dynasty. By 334 BC, seven warring states emerged all seeking to claim the mantle of the “Mandate of Heaven” and become the one, true successor to the defunct Zhou Dynasty. At the start of this era, the two most potent powers were the Qin and Chu. The Chu was the more powerful of the seven competing states. But, thanks to superior statecraft and mastery of strategy, the Qin came out as the victor of this period.  

The Warring States Era, though, was preceded by the Spring and Autumn Period. This age directly informed the Warring States Period. In the Spring and Autumn Periods, in which the mighty Zhou Dynasty began its long fall from grace, China’s disparate factions were held together by a mighty hegemon. This leader was selected by the various factions to represent their shared interests and held the country together by brute force. And, from the Spring and Autumn Periods came the realization—still understood today by Chinese leaders—that there was only room for one dominant force at the top of any system. As Jiang Zemin, the Chinese leader from 1995-2003, was fond of saying, “There cannot be two suns in the sky.” The Spring and Autumn Periods gave rise to the even bloodier Warring States Period, in which multiple factions vied to become that singular sun in the Chinese sky.  

Out of the Warring States Period, the Qin became one of the most prominent dynasties in Chinese history. What’s more, the Chinese idea of needing a strong central authority to maintain harmony was reinforced. The Warring States Period was the most similar to the anarchic international political system that exists today. And, most Chinese strategists view the United States as sitting in the dominant position that the Chu sat in. In this scenario, then, the Chinese are in the Qin Dynasty’s position. Thus, like the Qin, Beijing today believes that it will displace the more powerful Chu. Whereas the Chu had overwhelming military power, the Qin used guile, diplomacy—all measures short of direct warfare—to sap and undermine the more potent Chu. Whatever military conflicts occurred between these two elements and their allies, the Qin had done far more damage in the realm of non-kinetic combat.  

All of China’s historical patterns for handling both its internal politics and foreign relations will come into play in their dealings with the United States.  

China’s “Barbarian-Handling” Techniques  

The great strategist, Edward N. Luttwak, argues that various Chinese leaders have created what he refers to as “barbarian-handling” techniques meant to protect the “core” of China from pernicious foreign influence and conquest—to be used even against technically superior foes. In this way, then, Chinese civilization is never truly defeated. As my colleague at American Greatness and noted China scholar, Steven W. Mosher, wrote in his epic 2017 book, The Bully of Asia: Why China’s Dream Is the New Threat to World Order:

In China this process of assimilation went much deeper [than in ancient Rome]. The assurance of cultural superiority was not only a matter of arrogance on the part of the Chinese elite, but a perspective often shared by other peoples within China’s expanding shadow. The superiority of the Chinese way of life, with its advanced agriculture, its written language, and its highly developed arts, was attractive enough that those who fell under Chinese rule often came to admire their conquerors greatly and actively sought to assimilate. This cultural superiority was underlined by Confucian ritual, which stressed harmony, hierarchy, and discipline, and it was enforced with cruel and calculated ruthlessness by Legalist rulers […] Whole peoples conquered by the hegemon [of China] quickly redefined themselves as Chinese; adopted Chinese language, dress, and agricultural practices, and disappeared without a trace into the Chinese demographic sea. More than conquered, they were thoroughly Sinicized. Ancient Chinese texts make references to people who long ago ceased to exist as separate ethnic groups, so completely have they been assimilated into Chinese culture.

Historically, even those who have invaded China eventually became Sinicized the longer they remained in China. It may have taken several generations, but ultimately the threat posed by alien ideas posited by barbarian conquerors have been overcome by the potency of the tianxia and its attendant concepts. Therefore, the notion of Chinese superiority is continually reinforced, and the Chinese leaders throughout history have rarely questioned their place as the civilized center of the universe with a unique mission to bring the barbarian outlanders to heel.  

In his analysis of China’s “barbarian-handling” tools, Edward N. Luttwak describes how Chinese elites seek to enmesh foreign foes in trade deals that ultimately benefit and empower China at the expense of China’s trading partners—even when those trading partners are foreign conquerors. Specifically, Luttwak assesses that China’s “barbarian-handling” pattern, which can be dated back to the Han Dynasty, goes as follows:

  • Initially, concede all that must be conceded to the superior power, to avoid damage and obtain whatever benefits or at least forbearance that can be had from it;
  • Entangle the ruler and ruling class of the superior power in webs of material dependence that reduce its original vitality and strength, while preferring equality in a privileged bipolarity that excludes every other power;
  • Finally, when the formerly superior power has been weakened enough, withdraw all tokens of equality and impose subordination.

The “material dependence” that Luttwak identified in the second bullet point above is especially important, considering the ongoing Trade War between the United States and the People’s Republic of China. The United States, under President Donald J. Trump, is finally awakening to the idea that its decades-long program of unfettered, “free” trade with China is not panning out as well as the Utopians who fashioned it thought the policy would. Like so many technically superior rivals of China throughout their long history, the United States did not anticipate the kind of silent war that China’s elite would wage upon America in an effort to “reduce its original vitality and strength” using all measures short of war.  

For more than a thousand years, China was known as the “Middle Kingdom.” It ruled the Asia-Pacific (today, Westerners refer to this region as the “Indo-Pacific” for political reasons). What it could not directly control it threatened and forced payment in the form of tribute. For a time, it was probably the most technologically-advanced state in the world. Yet, it did not get there on its own. Like the Borg from Star Trek: The Next Generation, China assimilated, annexed, and adapted many ideas, people, and technologies from others and integrated them into the dominant Chinese culture. This was done through trade, conquest, intermarriage, and a host of other interactions.  

By the time of the Ming Dynasty, China had sent massive ships—known as the Treasure Fleet—to scour the edge of the known world’s oceans and return with rare gifts as a tribute to the emperor. Under the command of the eunuch, Zheng He, the Treasure Fleets sailed the Indian Ocean, reached the Horn of Africa, and voyaged toward the South Pacific. At this time, in the 15th century, though, China was undergoing a period of relative decline. When the Ming emperor died, he was succeeded not by a competent ruler, but instead by bureaucrats and courtiers who were more interested in preserving their status than achieving national greatness.  

Under the rule of the short-sighted bureaucrats, China disassembled its Treasure Fleet and turned inward at precisely the moment that the Western states were coming out of their so-called “Dark Ages” in Europe. These countries were voyaging out to new and exotic lands, as China’s own Treasure Fleet had done, with intentions to claim these exotic lands and resources for their benefit. While China’s development stagnated during this time, Europe’s exploded. By the 18th and 19th centuries, the difference between China and its Western counterparts was clear. When representatives from the various Western powers made their way to imperial China during this time, they found a relatively backward country with a massive, untapped market for their goods. Slowly, over the next 150 years, the West spent considerable effort effectively colonizing and subjugating the insular-minded China.  

Despite this clear imbalance, and the fact that they had been subjugated, China’s leadership (and most Chinese) continued to view the technologically advanced Westerners as unclean barbarians. But China was helpless to counter the increasing potency of the Westerners who they viewed as having occupied their lands. To compound matters, neighboring Japan, a country that the Chinese have historically hated, had become a potent regional power in their own right and began imposing their will on China as much as the much-maligned Western powers had. And, the Japanese had adopted Western technology, capabilities, and patterns as their own, whereas the Chinese still clung to their antedated ways. This period has become known as the “Century of Humiliation” in Chinese state-run media. It was a period that challenged the very foundations of China’s ancient assumption of greatness. The ontological shock experienced by China during this period resonates throughout history even to this day, where Chinese students are indoctrinated by their Communist Party minders to “Never Forget National Humiliation!”  

There was, however, a flourishing of Chinese nationalist thought during the so-called “Century of Humiliation.” The old Chinese pattern for “barbarian-handling” started coming to the fore once again. One fiery nationalist, Zhang Zhidong, wrote an essay entitled “Exhortation to Study” in 1878 in which he created the concept of ti-yong. This was Zhang’s attempt to ensure that China could be a great state again without losing its culture (the fear of losing their culture through increased interaction with an expansionist and technologically superior West was what invited aggression from upstart Western powers in the first place). As Zhang argued in his essay (which was widely read by impressionable Chinese youths at the time), it was essential to “Keep China’s style of learning to maintain societal essence and adopt Western learning for practical use.” In this way, then, Zhang and his cohorts believed China needed to adopt Japan’s outlook on Western practices and technological development; that they should embrace the Western ways to modernize their country while at the same time preserving what Zhang believed to be China’s unique and superior culture.  

The Next Great Dynasty: China’s Communist Party

Zhang did not live long enough to see whether the Chinese people could accomplish the goal he set out in his seminal essay. By the turn of the twentieth century, China’s central authority was weakened to such a point that the Qing Dynasty inevitably collapsed—to be replaced by competing warlords. Disharmony and violence followed the collapse of any central Chinese authority (a pattern which, in itself, reaffirmed the historical Chinese claim that an all-powerful central authority was required to maintain harmony). Among the competing factions vying for central control over China were Chiang Kai-Shek’s Nationalist forces and Mao Zedong’s Communist forces. Both men were mortified by the leveling effect that China’s interaction with more advanced foreign states had on China’s development. Whereas the Nationalists sought to embrace Western methodologies for advancing indigenous Chinese capabilities, Mao’s Communists sought to separate their land from the West by embracing Marxism.  

However, to claim that the Chinese Communist Party was as an aberration to China’s traditional cultural and political preferences would be inapt. In fact, Mao’s version of Communism differed significantly from the Communism practiced in the neighboring Soviet Union. For starters, Mao adapted Marxist principles for China’s mostly-agrarian society. This caused ideological cleavages between his movement and the Soviet regime—the Soviets believed that a true Communist revolution could only be achieved in an industrial state. Since China was not a fully industrialized society, the Soviets did not understand how Maoism would either take root or be truly complimentary to Soviet Communism. Nevertheless, the Soviets supported Mao in his mission to become the next ruler of China.  

By the end of the Second World War, when their common Japanese enemy had been vanquished (mostly through the hard fighting of Chiang Kai-Shek’s Nationalist forces), the Chinese Communists were able to focus their ire on defeating the Nationalists in the Chinese Civil War. By 1949, thanks to poor strategic decisions by Chiang and his Nationalist generals, as well as the fact that the Nationalists were severely depleted from years of having fought the Japanese invaders (whereas the Communists deftly hid out in the mountains and bided their time, for the most part), Mao’s forces defeated the Nationalists. The remnants of the Nationalist forces fled across the Taiwan Strait and proclaimed the nearby island of Formosa (known now as Taiwan) as the home of the legitimate Chinese government. Meanwhile, Mao’s forces marched proudly in the streets of Peking (present-day Beijing, the capital) and proclaimed themselves the true rulers of mainland China.  

During his triumphal movement, Mao gave a speech in which he declared that China had finally “stood up.” Mao was a blood-stained, jack-booted tyrant, but he was no fool. Mao had also exhorted his people to “Overtake Great Britain and catch-up with America!” Yes, Mao was a committed communist who fought his entire adult life to win the class struggle that communists always ranted about. No, as has been evidenced above, Mao was not a pure communist. Communism was an ideology that sought to deracinate peoples around the world from their cultures, thereby replacing those purportedly petty, regressive, bourgeois cultures with the dictatorship of the proletariat. Mao spoke as a communist and used his power in China to squelch those he deemed to be class traitors and members of the bourgeois, but there was something more: Mao and his comrades in the Chinese Communist Party (CCP) could not let go of China’s troubled past. In fact, the entire impetus for Mao’s rise was the notion that for more than a century, China had been laid low and abused by colonial Western empires. Mao routinely played on themes of reclaiming historical Chinese greatness by standing up to the West and avenging the perceived injustices that their ancestors had visited on China, as evidenced by his speeches in which he exhorted the Chinese people to overtake Great Britain and catch up to the Americans.  

One could almost see the spirit of Zhang Zhidong alive and well in the CCP. Since Mao, the CCP has sought to absorb advanced knowledge, at first from the Soviet Union and later from the West. Thus, the rhetoric of Communism fit nicely with the overarching Chinese ethos of the Tianxia and the need to centralize power in the hands of a potent, totalitarian leader. Tellingly, Mao’s relationship with the Soviets was strained from the beginning. It’s true that Mao admired Josef Stalin; Mao even fashioned his own cult of personality along Stalinist lines. Yet, once Stalin died and Nikita Khrushchev assumed power in Moscow, the battle lines between the Communist leadership in Beijing and those in Moscow were drawn.  

Even before Stalin’s death, Mao had refused the Soviet Navy access to critical Chinese ports. Rather than relying on the notion that China and the Soviet Union were brothers in a global, revolutionary ideological struggle against the pig-dog capitalists of the West, Mao rested his opposition to the Soviet request on the notion that the last time the Chinese government allowed foreign navies to operate from their ports, China had been colonized, brutalized, and exploited by those foreigners. “Never again!” became the battle cry of the bloody-minded Maoist regime. Things only got worse as the personal animosity between Stalin’s successor, Khrushchev, and Mao intensified.  

The moment Mao defeated the American-backed Chinese Nationalist forces in their civil war, Stalin had committed the Soviet Union to assisting China in its bid to industrialize. The reasoning was simple: for China to truly experience a workers’ revolution, it needed to be an industrialized state. The Soviets shared critical manufacturing capabilities and weapons designs with the Chinese at the start of their alliance. But it soon became clear that Mao’s desire for these capabilities was less to make China a better partner with the Communist bloc. Rather, his desire was to fulfill both his and Zhang Zhidong’s calls to force China to catch-up and overtake the West. Communism was an ancillary concern in this way. The fact that many of the centralizing themes of Communism comported nicely with historic Chinese cultural and political patterns, such as those found in the Legalist, Confucian, and even Taoist schools of thought was, until very recently, missed by most scholars.  

The Sino-Soviet Split  

Trade with the more advanced Soviet Union soon gave way to outright technological theft and industrial espionage, as the Chinese knew that the Soviets were holding back critical things, in order to keep their strategic advantage over the upstart Chinese. As the great China scholar, Dr. Michael Pillsbury, recounts in his excellent 2015 work, The Hundred-Year Marathon, by the 1960s, the Soviets had started to challenge China’s commitment to their alliance. Not only had Mao’s spies been stealing anything they could to leapfrog the Soviets in their Long March toward modernity, but Chinese forces had also started clashing militarily with their Soviet counterparts along their shared northern borders. In fact, there was growing concern that the skirmishes were becoming so caustic that a limited nuclear war could occur between China and the Soviet Union.  

One of the main reasons for the Sino-Soviet schism revolved around the fact that Nikita Khrushchev’s government was giving the Chinese government plans for nuclear weapons devices, as per their friendship agreement. Yet, when Mao threatened neighboring Taiwan—prompting American threats of major retaliation—Khrushchev begged Mao to stand down and negotiate a settlement. Mao’s response was that he did not “fear nuclear war” because, ultimately, China had more people than their foes did and would come out of a nuclear exchange still standing whereas their rivals would not. Further, Mao insisted that Chinese women “would make up” whatever losses China incurred in a nuclear conflict with the West within a generation or two. At that point, Khrushchev believed he was dealing with a madman and ordered the nuclear weapons sharing project suspended.  

It was in this morass that Mao and his ministers recognized the need to distance themselves from the Communist bloc. The United States and its Western allies were far more advanced than their Soviet rivals. Besides, China had acquired nearly everything of value they could from their Soviet “allies.” China could therefore afford to now pivot away from Moscow’s orbit and seek to gain access to far more advanced capabilities from the West. While the Americans had experienced a grueling defeat in the Vietnam War, the Chinese leadership understood that the Americans were looking for a game-changing event to help swing the momentum in the Cold War in favor of the West. Thus, the previously sealed off Middle Kingdom, under the direction of Mao Zedong, reached out to the Nixon Administration.  

Recognizing the extraordinary opportunity that flipping Communist China offered the American effort against Soviet Communism—the chance to “drive a stake through the heart of the Communist alliance” as Nixon himself formulated—the White House took the opportunity. History was forever changed. It was a diplomatic coup for the besieged Nixon presidency, a crowning achievement in the career of Dr. Henry Kissinger, the foreign policy aficionado of the Nixon Administration, as well as a decisive moment in the Cold War. From this point on, the Soviet Union’s days were effectively numbered. More importantly, though, the rapprochement between China and the United States set the stage for China’s unbelievable ascent from a backwater, totalitarian state possessed of an anemic agrarian economy—struggling to stay competitive with its neighbors—into the modern juggernaut that it is today.  

1979: America Slowly Surrenders to China  

At first, the Sino-American relationship was limited and based on purely short term, geostrategic interests (namely, containing the pernicious threat of the Soviet Union). But China’s leaders never intended to remain as the tertiary player in the titanic struggle between the Soviets and the Americans. Ultimately, Mao, the “Great Helmsman” of China, would die of natural causes and Deng Xiaoping would succeed him as China’s “Paramount Leader.” Unlike Mao, Deng was far more pragmatic in his governance (though nonetheless brutal, as he proved during the horrific Tiananmen Square protests in 1991). Under Deng’s rule, with the more experienced Republican Richard Nixon removed from office due to the Watergate Scandal and his own successor, Gerald R. Ford, unable to overcome the appeal of the Democrat 1976 presidential candidate, Jimmy Carter, the Chinese were able to exact a hideous concession from the naïve Carter Administration in the form of the 1979 Shanghai Communique. This was the document that officially announced Washington’s acceptance of the “One China” policy.  

Here was the first domino to fall in what would be a series of dominos leading to China’s integration into the American-led world order; its ultimate empowerment at the expense of its neighbors; and the Chinese vision of remaking the world order in its own image. The One China Policy was a pathetic compromise that the Carter Administration had made with China. In fact, it wasn’t a compromise at all. It was an outright concession to the Chinese Communist Party couched in the rhetoric of a fair trade (as would future “free trade” agreements made between the United States and China). With the Shanghai Communique of 1979, Carter committed the United States to recognizing the CCP’s view that Taiwan, the island-nation that the defeated Nationalist leaders from the Chinese Civil War had fled to and continued resisting the Communists from, was nothing more than a rebellious, breakaway province.  

The deal made between Carter and Deng Xiaoping’s regime removed Taiwan’s international status as a full-fledged nation-state and recognized it as a sovereign, though inextricable, component of China. The seat that Taiwan’s leaders had long since occupied on the United Nations Security Council was taken from Taiwan and given to the “lawful” leadership of China, the Communist Party. Taiwan would maintain its independence, but it would not have the full protections that other independent, sovereign states have. It existed instead in a legal and diplomatic gray area; its sovereignty truly maintained only thanks to American military, economic, and diplomatic largesse.  

Recognizing the foolishness of the Carter decision, former President Richard Nixon, who at this point was living in disgrace in California, wrote a secret letter to President Carter admonishing him for the short-sighted decision. The letter sat in the Nixon Presidential Library in Yorba Linda until 2006, when the noted journalist, Bruce Herschensohn, discovered it while researching his book Taiwan: The Threatened Democracy. In his incredible letter to Carter, Nixon argued that, contrary to President Carter’s claims in public, the deal Carter had struck with China was not merely about keeping a vital Cold War ally happy. It was, in fact, a terrible deal that would only encourage the Chinese to seek greater, costlier concessions from Washington. Nixon, a lifelong practitioner of the international relations theory known as “realpolitik,” did not share any sentiment toward American allies or even its enemies. He was merely interested in crafting a balance of power that was generally favorable to the United States. By ceding so much diplomatic ground to China on the matter of Taiwan, Nixon correctly feared that Carter had threatened the balance of power that Nixon and Kissinger had assiduously created just a few short years before.  

Nixon predicted that, with Taiwan taken off the table, the United States had lost a key bargaining chip for making better, more beneficial deals with China in the future. According to Nixon’s letter, China was a revanchist state with authoritarian tendencies. Thus, it would not remain either a stable nor reliable partner in America’s balance-of-power scheme without the United States holding significant leverage over the Chinese. Once Beijing deftly managed to get Washington to de-link itself (however tacitly) from Taiwan, the precarious balance of power between the United States and the People’s Republic of China shifted ever-so-slowly in China’s favor—and the United States gave away its greatest bargaining chip for empty promises.  

Death to American Manufacturing! All Hail China’s State Capitalism!  

The 1980s proved to be a boon for the Chinese as Deng Xiaoping used China’s newfound friendship with the dominant United States to create special free trade zones in foundering Chinese coastal cities, such as Shanghai. It was in these special free trade zones that a form of experimental market capitalism under the auspices of Chinese authoritarianism was allowed to occur. Inevitably, the promise of tapping into an economy with a billion people became too tempting for American and Western corporations to pass up. In the late 1970s and early 1980s, the first round of free trade deals was signed between American companies and China that would eviscerate the American manufacturing sector and help to build China’s massive middle-class. It was during this period that China also became the workshop of the world, as American manufacturing firms uprooted seemingly overnight from their bases in the American Rustbelt and moved to China.

The short-term gains for American companies engaged in the deindustrialization craze of the 1970s and 80s was so great that it created a wider snowball effect for other American firms in other parts of the economy to seek greater linkages in China. There is a direct connection between the collapse of the American blue-collar community due to deindustrialization and the propulsive rise of the Chinese middle-class. Meanwhile, the coastal enclaves in the United States, where manufacturing was not as important, but where what James Burnham called the “Managerial Class” lived, benefited most. It was in these bastions of prosperity where the policies to push those industrial jobs out of the American Midwest and into China were made—and these coastal metropolises rarely saw the negative downsides of these decisions. As American policy was increasingly determined by a conglomeration of corporatists, globalists, foreign-funded lobbyists, and airy academicians, the American economy was made susceptible to increasingly damaging Chinese economic attacks.  

The Chinese moved with great alacrity to acquire more and more capabilities from the United States. This happened over the course of decades. Today, there is a trade imbalance between the United States and China. The U.S. manufacturing sector has been gutted. Entire communities have been eviscerated; parts of Ohio and Pennsylvania look as though bombs have detonated in what were once prosperous factory towns. More aptly, Chinese economic bombs have detonated, and the impacts are still being felt today. They will continue to be so until American corporations are punished for their short-sighted dealings with China.  

Keep in mind that Chinese business practices are reprehensible. Not only has China, a long-time violator of any concept of basic human rights, been attractive to businesses because of its low-wage work force, but it is also known as a place where Western firms go to die, slowly. The first wave of Western firms to do business in China were the aforementioned manufacturing companies. They brought into China their advanced capabilities and knowledge. In order to do business in China, though, these Western corporations were told by the CCP to comport closely with their expectations and rules. Namely, U.S. firms had to divulge considerable amounts of trade secrets; the majority of their workers in China had to be Chinese (or the company had to bring their American employees who were about to lose their jobs and train the Chinese replacements); and the American firms usually had to partner with a Chinese state-owned enterprise. In essence, the U.S. firms had to build up their own Chinese competition.  

Several strange theories proliferated the halls of Western power at this time. One of them was what noted Libertarian economist, Eamonn Fingleton, referred to as “convergence theory.” In essence, American policymakers and greedy corporate leaders convinced themselves that, by doing greater trade with China, they were staving off another Cold War or worse. You see, the assumption was that American capitalism—as represented by our corporations—was the vanguard of democracy. Once China liberalized its Communist economic system it would inevitably have to liberalize its political system. And, since these theorists also subscribed to the equally idiotic “democratic peace theory,” which stated that fellow democracies do not wage war upon each other, true global peace would reign.  

Yet, as Fingleton (and others, such as James Mann) have assessed, the Chinese government had no intention of liberalizing their political system. Once American companies got into China and saw the immense profit they could reap, they were like putty in the Chinese Communist leadership’s hands. Examples abound of American corporations, rather than acting as vanguards of democracy in China, soon began acting like vanguards of authoritarianism in the United States. A poignant case study comes from Yahoo! in the early 2000s. Back then, Chinese journalists were using Yahoo! email accounts, knowing that their communications would be protected by the company, as it was an American firm beholden to U.S. laws. China’s state security apparatus wanted access to the Yahoo! email accounts so that they could prosecute and imprison the journalists who were writing negative stories on the Chinese Communist Party. The government in Beijing pressured Yahoo! by threatening their position in China. Ultimately, Yahoo! caved, and the journalists were summarily rounded up and disappeared by the government. Microsoft is responsible for similar actions in the early 2000s.  

In this way, then, American firms are becoming conduits for Chinese authoritarianism. Imagine what Apple and Google will eventually end up doing to protect their budding artificial intelligence research centers in China? China’s government has a plan to displace the United States and their trade and economic policies are at the forefront of those plans.  

Around the 1970s, Agency Theory—better known as “Shareholder Capitalism”—became the dominant ethos in the American business community. Taught initially at Harvard Business School, it became highly popularized (particularly during the Ronald Reagan era of deregulation). It also comported nicely with the increasing financialization of the American economy. This was the theory that essentially told Western corporate leaders that their only duty was to their company’s bottom line at the end of every quarter. By increasing their company earnings at the end of each quarter, these corporate leaders were enhancing the value of corporate stock holdings, and could, in turn, reinvest those earned profits in expanding their company. These business leaders would also receive immense bonuses and they would have the ability to retain more talent and to recruit more talent to maintain their company’s competitive edge. In order to accomplish the demanding goal of increasing corporate earnings at the end of each quarter, deindustrialization and increasing ties with the massive, relatively untapped market in China was a sound way for corporate leaders to uphold their fiduciary responsibility to their shareholders.  

Unfortunately, this form of capitalism also disregarded the national interest. It allowed for the hollowing out of critical American industries (while offering nothing substantive to replace them). It helped to eviscerate the American family and small-town America. It also further enhanced Chinese power, prosperity, and prestige. At the same time, unbeknownst to these short-sighted corporate leaders, their deals with China were to be self-negating in the long-run. Historically, once China acquires enough knowledge and capabilities from Western companies, they kick out those Western firms, and compete with them indigenously—using the methods and capabilities that they had gleaned initially from those Western firms!  

As China became increasingly rich and prosperous (as well as becoming the unofficial workshop of the world), the Chinese government took its newfound wealth and began reinvesting heavily into education. In particular, China became obsessed with increasing its indigenous STEM (Science, Technology, Engineering, and Math) capabilities. For 30 years, China has become a hub for these industries, so much so that KPMG assesses that Shanghai will soon be among the world’s leading tech innovation hubs. Chinese students were not only forced to become masters of the STEM fields over the last several decades, but, Chinese Millennials and the subsequent generation of Chinese students have been raised on the “wolf’s milk” of imperial nationalism while constantly hectored to “never forget national humiliation.”  

Over the last several years, China has undeniably moved up the developmental ladder, away from the old world industrial, manufacturing-type industries and has started to absorb advanced industries from the West. Tech companies, like Google and Apple, have been only too happy to do business with Chinese state-owned enterprises—giving China considerable access to advanced Western technology and business practices. At the same time, Chinese students who’ve been educated at top-tier Western universities have returned home, where they were greeted as conquering heroes by the CCP. Once ensconced in China, these Western-educated Chinese citizens began disseminating the advanced knowledge they had acquired. As David P. Goldman recently assessed at a Heritage Foundation lecture, the number of Chinese students seeking entry into Western educational institutions has declined precipitously over the last few years. This is not because the Chinese are giving up on their quest to become the economic and innovation superpower of the world. Instead, it is because so many Western-educated Chinese have returned to China that there is now a sufficient enough intellectual base to educate the next generation of Chinese engineers, innovators, and business leaders within the confines of China—thereby fulfilling Zhang Zhidong’s exhortation to study.  

China Corners Markets—and Goes Global  

Chinese workers and industry have spread beyond Chinese borders. Beijing has announced its intentions to unite Europe and Asia—Eurasia—together with Africa (and Latin America) into one, giant, Chinese-dominated trading zone known as the “One-Belt-One-Road” Initiative. This includes the creation of massive rail lines connecting China with far off places, such as Frankfurt, Germany. Meanwhile, China has gained access to geostrategically vital ports in places like Gwadar, Pakistan; Piraeus, Greece; Trieste, Italy; as well as drone bases in Eastern African state of Djibouti. All of this is an effort to better move Chinese-made goods to the rest of the world, as well as to ensure that China will have continual access to goods from abroad—without the risk of the United States Navy blockading those vital goods (like oil) in times of international crisis.

Meanwhile, in Africa, Chinese firms have sought increased access to the Rare Earth Mineral mines throughout that region. Rare Earths are extremely difficult to reach as they are deep beneath the Earth’s surface. But they are vital for modern society as they form the basis of our advanced technology. Beginning in 2010, Beijing recognized the strategic liability that Japan and the United States’ reliance on imported Rare Earths posed and sought to dominate that global market at the source of production. They wanted to be able to use their dominance of that sector to diplomatically squeeze the United States and its allies, should a crisis erupt. Fortunately for the West, the Chinese plan was never realized—no one can corner a market like that in today’s economic environment. Yet, thanks to their outsized presence in that market, China is able to raise the cost significantly on the U.S. and its allies (which, in itself is a strategic threat).  

By dominating these critical sectors at their production sources and then linking them with Chinese-dominated rail and maritime routes, China believes it will have created a zone of control that would be more prosperous and more powerful than that of the continent-sized United States. Europe, the various African states, Russia, and even distant Latin America have proven increasingly willing to become parts of this Chinese-dominated system. Trade is the critical element in this Chinese plan. And, the United States appears paralyzed in the face of this unconventional Chinese threat. Don’t believe that China’s strategy today is either unattainable or unpredictable. In fact, this has been the traditional pattern of Chinese state-building; it is how China has established hegemony over its region in times past. The difference is that China is not just seeking to use these methods to tame their own population and expand in the Asia-Pacific. If they are able to follow through on these plans fully, they will have turned all of Eurasia, Africa, and parts of Latin America into conduits of Chinese power.

What Is To Be Done?  

This is how Beijing intends to bring harmony to a disharmonious world. What’s more, it is eerily similar to how the Qin Dynasty ultimately won the chaotic Warring States Period (though with obviously different technology and on a far different scale). No American leader until President Donald J. Trump has identified these trends and responded in any meaningful way. The president is the first American leader of the modern age to respond to the Chinese threat as vociferously as he has. Unfortunately, even Trump’s response may be insufficient. After all, Trump has targeted mostly old world-type sectors to protect (farming equipment, manufacturing, etc.) Beijing wants to keep these industries, but they are far more interested in acquiring American high-technology capabilities. These industries are not at the forefront of the Trump Administration’s protectionist agenda. Yes, some defense of American high-tech has been mounted, but not enough.  

My colleague Gordon G. Chang has argued that the Trump Administration is harming Chinese economic growth (thereby weakening the CCP’s hold on power). He is likely correct. Yet, my other colleague, David P. Goldman, insists that China will not suffer the way it needs to for the United States to be secure until the U.S. government crafts a robust policy of public-private innovation meant to catapult American technology far ahead of China. Right now, China has nearly caught up to the United States in this vital area. Even if the United States implemented a robust protectionist policy of its technology firms, it will likely be insufficient to stave off the devouring dragon.  

Besides, Chinese economic growth, while it has declined over the last few years, remains higher than that of the United States. At around six percent GDP growth, the Chinese economy will continue growing—albeit slowly. Plus, China’s debt problem (which is in the trillions of dollars) is not as bad as it sounds. After all, Chinese debt is mostly from infrastructure related to the One-Belt-One-Road Initiative and they effectively borrowed that debt from themselves. Thus, it is not a fait accompli that they will be destroyed by their debt bomb (if it ever detonates at all). What’s more, infrastructure debt is usually a good form of debt because it signals to potential investors that your country is anticipating future growth.  

As China’s GDP growth does decline slowly as a result of not only the ongoing Trade War, but more as a result of the CCP’s policy of forcibly transitioning their economy from a manufacturing, production-type economy with a high personal savings rate into a consumption-type, Knowledge-Based, post-industrial economy, Beijing will have to keep political order in China. This will mean that China will become increasingly belligerent with their neighbors—including the United States. China has embarked upon a large-scale military modernization program. Many of their new weapons technologies are reaching maturation. The time is upon Beijing’s leadership to take bold action against their perceived enemies. This is especially true as the United States acts with increasing decisiveness to defend what it perceives as its own interests vis-à-vis its relationship with China. Therefore, China’s continual mumbling about invading Taiwan in the next decade should not be taken lightly. Nor should China’s claims that they’re going on a war-footing against the United States be dismissed.  

The Chinese system is autarkic in the same way that the old Soviet system was. And, there is no doubt that China’s GDP growth is in relative decline (though it remains significantly higher than that of the United States and will likely remain so). My hope is that Gordon Chang and Kyle Bass are correct: China in its current form is doomed to collapse. All we need do is continue piling on with protectionist trade measures and increasing our military presence in the region. Yet, David Goldman’s claims that China remains a potent force today should not be brushed aside. The data indicates that China remains competitive—and attractive in terms of trade. Further, it is likely that China will remain a threat for the foreseeable future.  

Going forward, the United States must not only move to protect its agriculture and manufacturing sectors as it is currently doing in the Trade War, but it also must seek to completely cut off China’s theft of high-technology. Therefore, U.S. government power must be brought to bear against American corporations doing business in China; intellectual exchanges between American and Chinese academic institutions must be curtailed; American corporations must be enticed to return to the United States rather than seek to do business in places like China. We may not be able to totally stop the proliferation of advanced American technology to China, but the United States can certainly slow it down significantly. Meanwhile, a robust and coordinated public-private sector strategy of massive investment in research and development must be undertaken as David Goldman has suggested. The same program that the Reagan Administration used to leapfrog the Soviets technologically must be applied to leapfrog and ultimately defeat the Chinese today. Further, greater coordination between allied Asian states and European ones must become a priority, since China will always seek to play us off each other.  

If these steps are not taken soon, then the historical patterns governing China will defeat the West in its attempts to protect itself from a pernicious and dedicated rival in Communist China.  

The Chinese are a great people with a rich history. They have known general dominance throughout their 4,000-year history. What’s more, as Deng Xiaoping said when the Soviet Union collapsed, China has been engaged in a second Cold War with the United States. They’ve been winning—and they will continue to do so unless we do more than what we’ve been doing to counter them.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s