Checking In on China (and America’s Undeserved Crisis of Confidence)
The pandemic and economic policies that seemed to be fueling China’s rise now seem to be an anchor.
Almost exactly a year ago, I took to these pages to lament and correct the emerging consensus in Washington that China’s economic rise justified a broad rejection of free markets and a warmer embrace of “China-style” industrial policy and economic planning in the United States. At the time, this view was perhaps somewhat risky—China, as you may recall, seemed to be navigating the pandemic pretty well, with various economic and COVID-19 metrics (at least publicly) looking good by international comparison. The United States, meanwhile, was just emerging from its pandemic slumber (thanks, vaccines!), and various pieces of industrial policy legislation—most notably the massive United States Innovation and Competition Act of 2021—seemed to be quickly heading for President Biden’s desk with overwhelming bipartisan support.
In the last year, however, the script has been—as the kids say—flipped. The pandemic and economic policies that seemed to be fueling China’s rise now seem to be an anchor, and the United States—though surely challenged by inflation and other discrete policy issues (labor shortages, supply chain stuff, etc.)—seems to be back on or even above its pre-pandemic economic trends, even as that industrial policy bill remains incomplete. And here lies, I think, an important lesson about not only the “China threat” but also U.S. policy and our long and misguided love affair with economic pessimism.