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What to Do About China?

By attempting to "get tough" with China, US President Donald Trump's administration is highlighting the extent to which America's star has fallen this century. If the US ever wants to reclaim the standing it once had in the world, it must become the country it would have been if Al Gore had won the 2000 presidential election.

BERKELEY – In a recent issue of The New York Review of Books, the historian Adam Tooze notes that, “across the American political spectrum, if there is agreement on anything, it is on the need for a firmer line against China.” He’s right: On this singular issue, the war hawks, liberal internationalists, and blame-somebody-else crowd all tend to agree. They have concluded that because the United States needs to protect its relative position on the world stage, China’s standing must be diminished.

But that is the wrong way to approach the challenge. In the near term (1-4 years), the US certainly could inflict a lot of damage on China through tariffs, bans on technology purchases, and other trade-war policies. But it would also inflict a lot of damage on itself; and in the end, the Chinese would suffer less. Whereas the Chinese government can buy up Chinese-made products that previously would have been sold to the US, thereby preventing mass unemployment and social turmoil, the US government could scarcely do the same for American workers displaced by the loss of the Chinese market.

In the medium run (5-10 years), the US would face even larger problems, because China would have begun to replace US customers and suppliers with those of Europe and Japan. At the same time, an America that has just blown up its relationship with China will have a hard time convincing anybody else to fill China’s shoes as a trade partner and source of investment. Becoming the world’s irrational doofus comes with costs, after all.