The Biden administration needs a clear-eyed understanding of China’s inherently political threat.
The Biden administration needs a clear-eyed understanding of China’s inherently political threat.
J oe Biden has a China problem. First, and most obvious, is the extent to which he knew and participated in Hunter Biden’s questionable deals with Chinese firms closely connected to the Chinese Communist Party (CCP). A federal investigation is currently underway. And while the president-elect is not the subject of that investigation, it doesn’t take a political genius to see this may be a land mine for the incoming administration.
More broadly, Biden has been far too accommodating to the ambitious and unscrupulous Chinese state during his tenure in elected office. The CCP is clearly hoping for a return to the squishy policies it was treated with under the Obama-Biden administration. But if Biden wants to govern effectively now, he must toughen up. China difficulties extend far beyond our now-strained trade relationship; indeed, these problems stem from politics, not economics.
For all its faults, the outgoing administration understood the Chinese state for what it was. A recent Wall Street Journal editorial admirably sums up that
one of the Trump Administration’s achievements was to recognize that China has become America’s primary adversary. It steals U.S. technology, monitors and intimidates critics on American university campuses, engages in massive spying, claims new territory in the South China Sea, and threatens U.S. allies in Taiwan and Australia.
Again, we must realize that the heart of this conflict is political. Especially since President Xi Jinping’s political ascent, the CCP’s capacity to coerce and control has grown significantly. Far too many see China merely as an economic competitor. Were this the case, there would in fact be no problem. One of the costs of China hawkery under Trump has been a revival of “folk economics,” which is biased against economic dealings with foreigners. I regret to inform international-trade skeptics that the economists were right in 1776, they were right in 1817, and they are right again today: Trade is win-win, whether it crosses a line on a map or not.
But our ongoing conflict with China is not about trade. Far more than that, it’s about the rules-based international order that enables countries to interact peacefully and productively. It’s about ensuring a well-behaved state operates within a community of other well-behaved states, and about standing firm when an up-and-coming power commits egregious human-rights violations, such as imprisoning democracy advocates and abusing millions of ethnic minorities.
Even free-market economists know that the free nations of the world should think twice about overlooking injustices for the sake of preserving lucrative trade relationships with authoritarian regimes. In the 20th century, the primacy of politics was perhaps most eloquently put by German economist Wilhelm Röpke, who helped lay the intellectual foundations for his country’s post-war “economic miracle.” As I wrote in April of this year,
Röpke’s position deserves close scrutiny because he has impeccable liberal economic credentials: although a cultural conservative, Röpke greatly appreciated the free market, as is obvious from his magnum opus, A Humane Economy. Röpke’s economic liberalism included a vociferous defense of a liberal international economic order. But when the issue is trade between free states and Communist states, the issue is no longer one of economics alone.
Röpke’s advice for how the West should deal with the Soviet Union during the Cold War can be very useful for us in our dealings with China today. To be sure, our current strategic scenario is quite different than it was 60 years ago. The CCP is not communist in any meaningful sense, and has no interest in exporting ideological conformity to Marxism. (That it not only gets away with, but thrives by promoting a system much closer to fascism than communism is a masterful sleight-of-hand.) Nevertheless, the substance of Röpke’s teachings generalizes to our geopolitical context.
The Chinese state exercises unparalleled control over Chinese firms. Indeed, we can’t really think of the Chinese economy as a separate entity from the Chinese government. As much as market liberals decry the increasingly murky boundary between business and government in the Western world, China plays this game on an entirely different level. Röpke warns us:
It follows that each and every economic transaction with the Communist empire is an act of international politics, for the simple reason that the other party regards it as such. . . . For monolithic Communism, trade with the West is primarily a political act: for the pluralistic West, it is primarily an opportunity for business and profit.
Again drawing from my previous essay:
This asymmetry places free states in considerable danger. Although the Chinese Communist Party has permitted significant economic liberalization in recent decades, we would be foolish to ignore the fact that they are still authoritarian despots, uniquely positioned to exercise political control of economic matters in the service of hegemonic ends. Röpke’s position, generalized to the current confrontation with China, is simple: liberal internationalism is not a suicide pact.
Before we can do anything about China, we must recognize the strategic scenario for what it is. The CCP, as a matter of course, controls firms and markets to a degree that the U.S. has only ever achieved during wartime. To be clear: This is not a call to do likewise, and certainly not a call for military confrontation. Rather, it is a warning. We cannot let the truth of comparative advantage blind us to the reality of Chinese hostility. Sometimes political problems have economic solutions. As we’ve learned the hard way, this is not one of those times.
Hopefully the Biden administration recognizes China not as a partner, but as an adversary. The president-elect and his appointees cannot use liberal internationalism as an excuse to avoid taking a hard line on the CCP. As Röpke showed us, liberalism is perfectly compatible with standing up to bullies. Some responses are obviously off the table. (Let nobody utter the phrase “regime change” ever again.) But there are all sorts of intermediate actions that can and should be tried, including a generous admittance policy for political and ethnic-religious refugees and clamping down on industrial espionage.
Ultimately, the future of U.S.–China relations will be decided by the people in the room, including soon-to-be-President Biden. Let’s hope they don’t start from faulty kumbaya premises.