THE NEED FOR BALANCE: COOPERATION, COMPETITION, AND THE U.S.-CHINA RELATIONSHIP
BY JUSTIN CHAPMAN
The Pacific Council recently hosted an installment of the Edgerton Series on Responding to a Rising China, featuring Dr. Geoffrey Garrett, dean of the USC Marshall School of Business and former president of the Pacific Council, on how the United States should balance competition and collaboration with China, the prospects for economic decoupling, and the state of bilateral trade. The discussion was moderated Jennifer Faust, executive director of the Pacific Council.
Here are takeaways from the conversation:
Garrett pointed out that because the United States and China are engaged in an unfortunate blame game over who caused the virus and who’s responsible for its global spread, people are missing the larger picture between the two countries.
“The lesson the United States is drawing from the crisis is that it’s underscoring American instincts toward isolation, that the rest of the world is a problem not an opportunity,” he said. “I’m struck that China is coming out of the economic crisis more quickly, which has empowered Xi Jinping to be even more aggressive on the world stage. We hear a lot about China’s ‘wolf warrior diplomacy’ and the uglier face of that, but China is pressing on all dimensions internationally because they see an absence of U.S. leadership and an unwillingness on the part of the United States to play a global leadership role.”
What’s actually going on in the U.S.-China trade war? How closely is China sticking to its commitment to increase the purchase of American products by $200 billion by the end of 2021? “The simple summary is: China is not living up to its Phase One commitments,” Garrett said. “They’re maybe at 50 percent of what you would expect to have happened by today, with the interesting exception that the only product category where China is buying more from the United States is semi-conductors, the precise industry that the United States wants to restrict Chinese access to.”
“The other thing no one is paying attention to is the fact that the U.S.-China trade deficit has come down enormously in the past 18 months,” he added. “It was about $75 billion lower in 2019 than in 2018, and it looks like that trajectory is going to continue in this pandemic year. That raises an interesting challenge for the United States in the next 12 months: China is probably not going to meet its Phase One commitments in the next 18 months, but the object of the trade war—to reduce the trade deficit—is actually happening on a pretty large scale. But how can those two things be true? How could China not be meeting its commitments but the trade deficit is going down? The answer is: America is buying many fewer Chinese products than it did in the last several years.”
The Edgerton Series on Responding to a Rising China aims to provide proactive and forward-looking solutions to some of the most complex local, regional, and global issues facing the United States and China today, through regular engagement in debates and discussions with the foremost experts in Chinese affairs. The Edgerton Series is made possible by generous support from the Edgerton Foundation. We thank Dr. Bradford and Ms. Louise Edgerton for their continued support of and dedication to the Pacific Council.
WATCH THE FULL CONVERSATION BELOW:
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The views and opinions expressed here are those of the speaker and do not necessarily reflect the official policy or position of the Pacific Council.
