Yesterday, Cato published a new paper from my colleague Clark Packard and me proposing a better, saner approach to U.S. policy toward China. We warn that current U.S. policy has thus far proven not only ineffective but also incoherent and even counterproductive against the very real economic and geopolitical challenges that today’s China presents. Capitolism’s most diligent readers (which of course you all are) will recognize a lot in the paper, especially on the foolishness of current U.S. tariff and trade agreement policy—toward China, U.S. allies in Europe and elsewhere, and (most insanely) non-China alternatives like Vietnam. My most recent newsletter, in fact, explained how tariffs, U.S. non-involvement in trade agreements, and other moves have nudged developing countries like Vietnam and Malaysia further into China’s economic orbit. And, of course, I’ve spilled a lot of virtual ink detailing how the Trump/Biden tariffs have undermined American companies’ competitiveness—increasing production costs, discouraging investment, etc—while doing little (if anything) to hobble China or persuade Beijing to change course. So, don’t worry, I won’t be banging those drums again this week.
Another, non-trade area, on the other hand, deserves emphasis when it comes to U.S.-China policy—immigration. And on this score, the United States is failing pretty miserably.
First, Let’s Be Realistic
Before we get to that, however, it’s important to emphasize that U.S. trade and foreign policy discussions frequently suffer from an almost comical lack of humility about the extent to which Washington’s actions can and do affect the geopolitical and economic decisions of foreign nations—especially big ones. We often hear, for example, how U.S. trade policy was single-handedly responsible for China’s rise, while anyone with a lick of knowledge about the issue will tell you that most of China’s economic and trade prowess today is owed to its own market-oriented internal reforms (privatization, market opening, etc.), not increased access to the U.S. market in the 1990s and 2000s. The latter probably accelerated Chinese economic growth a bit, but China was rising regardless.