Beijing is on the way to seriously dismantling Washington’s economic and
political leverage over China’s economy. During 11 months of last year,
China stepped up the rate of decline of its trade surplus with the U.S.
to 16.2%.
Feverish sinologists would call that “decoupling” — a misnomer for
China’s belated exit from a position of an excessive and unsustainable
trade surplus with the U.S.
Those sinologists don’t seem to notice that China is getting out of that
self-imposed structural trap by aggressively slashing its U.S.
purchases at an annual rate of 12% between January and November of last
year.
Instead of worrying about “decoupling,” advocates of friendly U.S.-China
ties should remind Beijing that it should be doing exactly the opposite
— by drastically stepping up imports of American goods and services. If
the Chinese did that, they would not have to abandon their U.S. markets
by cutting exports at an annual rate of 15.2%, as they did for nearly
all of last year.
Looking at trade flows and China’s declining holdings of U.S. debt, the
Chinese have apparently concluded that a rapid narrowing of U.S.
exposure was a matter of their national interest.
That conclusion has come after years of pleading for a “win-win
cooperation,” while Washington kept trying to contain China’s growing
global economic and political influence. Instead of cooperation, the
U.S. defined its relationship with China as a strategic competition with
a country seeking to destroy the Western (i.e., American) world order.
Cooperation made sense for China because it meant an open access to U.S.
markets and technology transfers. The U.S., however, finally began to
see things differently as it woke up from its evanescing dream that an
increasingly prosperous China would shake off its communist rule and
join the U.S.-led Western community.
What followed was a radical U.S. policy change Beijing apparently did
not expect. China’s huge, and growing, American trade surpluses became
an imminent strategic danger that had to be fought by tariffs, sanctions
and strict limits to Chinese investments in the U.S. economy.That is
the tense economic and political context of last week’s trade deal,
where the U.S. sought to impose controls on China’s trade and financial
policies, under permanent pressure from an intrusive enforcement
mechanism.
Glad-handing and vacuous rhetoric aside, the truth is that both
countries have now stepped into a new phase of strategic competition.
China has no illusions about that. Beijing, therefore, seems determined
to rapidly shrink its trade imbalance with the U.S. in an anxious quest
for alternatives to dollar-denominated trades and a dollar-dominated
world financial system.
A tall order? Yes, but Beijing sees no other way of protecting its vital
economic interests while remaining on a permanent collision course with
the U.S. on so many war-and-peace issues: Taiwan, the Korean Peninsula
and China’s contested maritime borders.
A tall order indeed, but China is making progress on that long march.
Last year, for example, China significantly diversified its trade flows.
Its export business with Southeast Asia, Africa and nations along the
Belt and Road corridors made it possible to obtain an export growth of
5%, in spite of double-digit declines in sales to the U.S.
