Washington has lost the ‘economic battle’ with Beijing
China has ripped up America’s ‘playbook’ with ‘state capitalism’ dominating the international order
Washington has already lost the economic war with Beijing after Chinese President Xi Jinping ripped up America’s “playbook.” Arguments that the “United States must reassert its leadership” miss a crucial point, “China has remade the international system” in its image.
The stark facts may be unpalatable for US President Donald Trump’s tariffs-first approach. But former Trade Representative Michael Froman makes a compelling case for this changing of the guard scenario in Foreign Affairs this week.
“China’s nationalist state capitalism now dominates the international economic order. Washington is already living in Beijing’s world,” the president of the Council on Foreign Relations, a New York-based think tank, wrote in a commentary.
“Whether or not the United States can compete with China on China’s playing field, it is important to recognize a fundamental truth: [it] is now operating largely in accordance with Beijing’s standards,” Froman pointed out.
“[This] new economic model characterized by protectionism, constraints on foreign investment, subsidies, and industrial policy [is] nationalist state capitalism. In the war over who gets to define the rules, the battle is over, at least for now. And China won,” he said.
Beijing’s model revolves around ‘significant state support.’
Center for Strategic and International Studies
Boom time:
- Protectionism, subsidies, and a state-industrial policy have turned China into the factory of the world.
- It also dominates “global markets” in advanced tech goods, such as electric vehicles, solar panels and wind turbines.
Delve deeper: “China’s manufacturing boom has fueled decades of export-oriented economic growth,” the Center for Strategic and International Studies reported.
Between the lines: [This is] undercutting foreign competitors and contributing to a growing appetite for tariffs in the United States and Europe,” the Washington-based think tank said.
Big picture: Beijing’s model revolves around “abundant, low-cost labor, large economies of scale, and significant state support.”
China Factor comment: The Communist Party-backed strategy has seen manufactured exports soar by “more than 25-fold” during “the last two decades.” Washington will need allies, not just tariffs, to stem that trade tide.