Do We Really Need a New Cold War?

(837 words, four-minute read)

In the wake of COVID-19, President Trump is again ramping up his attacks on China. It looks like candidate Biden will not be outdone. Must China be an enemy? Or are we be simply displacing blame for our growing problems?

The global competitiveness of the US is in decline and we now rank poorly amongst OECD countries in education, healthcare, and infrastructure. The failure to respond adequately to the COVID-19 virus is only the latest example.

Let’s blame China

Rather than assume responsibility and rally our collective will to address the decline, however, we increasingly resort to shifting blame to others for our condition. As China grows in economic strength and influence, they have become a compelling target. The fact that COVID-19 originated there has only added fuel to the fire.

There are so many things about China that we don’t like

They are not a democracy. They have a centrally controlled, mercantilist economy. They don’t protect intellectual property or labor like we do. Their people work longer for less, enabling many of their industries to outperform ours. We buy more from them than they buy from us, resulting in trade deficits. They have become our second largest creditor and we owe them over $1.0 trillion. By making Belt and Road infrastructure investments around the world, they have ensured long-term supply chains, accessed new markets, and grown in influence.

To all of this I say, “So what?” 

History does not guarantee American economic superiority. We have to work for it. By getting richer, China does not make us poorer. We alone have done that. 

Let’s start with trade

We blame China for our trade deficit and job losses in manufacturing, and accuse them of unfair trade practices. This is rich given the many ways our government protects our own industries through subsidies, tax incentives, and trade agreements. It overlooks the painful reality that China primarily outperforms us because they are willing to work more for less, and the American consumer likes the low prices that result. This fundamental truth drives trade deficits and job losses more than any market interference.

We are also routinely warned that China seeks “economic dominance.” What does that even mean? Don’t all countries aspire to wealth and influence? Since when has economic dominance been the sole right of America? America alone has enjoyed decades of economic rent thanks to having the world’s reserve currency. When did that benefit become a right?

Then there is the military “threat” 

Here we see another way that hypocrisy clouds our vision. China spends less than one-third of what we do on defense (and far less if you count our allies), has no significant military alliances, and has only one military base outside of China. 

In contrast, the US has an explicit strategy of military dominance in all regions of the world, including the South China Sea. We have 800 bases globally and maintain alliances with most of the developed world in order to ensure that dominance. We surround China’s eastern border with a military presence in South Korea, Japan, and the Philippines and we invaded and occupied Afghanistan, a stone’s throw from their western border.  

Given this track record, who should fear whom? Nonetheless, American hawks warn us of China’s “aggressiveness” in the South China Sea. Aggressive relative to what? Aggressive relative to our desire to dominate their region? How in good faith can we fault a country that wants to control their border, not to mention one that is on the other side of the globe? Imagine the outrage if they objected to our presence on our border with Canada or Mexico? 

And finally, there is COVID-19

COVID-19 has provided a whole new reason for Americans to be mad. 

Notwithstanding the fact that Dr. Gau, the head of China’s CDC, personally alerted Dr. Redfield, head of our CDC, as early as January 2 about the danger of the virus, let’s assume that China was indeed slow to disclose the extent of the problem, and understated the number of infections and deaths. Now what?

None of that excuses us from handling the crisis as ineptly as we have. While they might not have been 100% transparent, they were sufficiently transparent that we could have learned from them and reacted. The playbook was clear: test, trace, quarantine according to severity of symptoms, repeat. It was clear to the South Koreans and others. It was only apparently unclear to the snoozing officials of the CDC, NIAID, and the administration. And the devastating results are undeniable.

The Wisdom of Benjamin Franklin

When Benjamin Franklin said, “Any fool can criticize, condemn, and complain, and most fools do,” he surely never imagined that his observation would fit the future United States of America. Have we become a nation of complainers?

Until we own our problems and abandon our entitlement, we will not reverse the decline. And shifting blame by creating a new cold war with China will not help. In an increasingly interconnected world, it makes no sense to pick a fight with the world’s most populous superpower. Without a productive relationship with the Chinese government, our standard of living will suffer, little progress can be made on addressing climate change, North Korea will remain a source of global instability, and excessive military spending will continue to squander our limited resources.