China’s Response to the Trade War
A core doctrine of American governments since World War II has been that trade liberalization would lead to a virtuous cycle of rising wealth and ever more resilient democratic institutions. Economic convergence, the thinking went, would pull the world out of poverty and into wealth and freedom — and we would all live happily ever after.
Alas, the fairy tale was not to be. Western leaders didn’t understand that autocratic regimes would adapt to economic liberalization in ways that protected their interests. And nowhere is that more evident than in the tortuous story of U.S.-China relations.
U.S. presidents Bush and Obama both backed their trade policies with bets on Chinese democratic reforms they presumed would come. China’s president, Xi Jinping, turned those bets into dead money. Now he’s countering President Trump’s “easy to win” trade war with a mix of retaliation and one-off concessions. Given the adverse geopolitical dynamics at work here, it’s hard to come up with a sequence of moves in which both countries don’t lose.