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Politics

保护主义引发地缘政治之火

Sep 19, 2023 Pinelopi Koujianou Goldberg

纽黑文—令人费解，许多著名经济学家谴责特朗普政府的关税是减少福利的保护主义，同时又赞同拜登政府采取更激烈的措施，再岸化（reshore）、友岸化（friend-shore）和与中国脱钩。在 2018 年 3 月芝加哥布斯对经济学家进行的一项民意调查中，100% 的受访者反对美国的新关税；但随后，在2022 年 1 月被问及时，大部分同样的受访者对全球供应链持怀疑态度。只有两名受访者（我是其中之一）不同意依赖外国投入品让美国工业变得脆弱的观点。

丹尼·罗德里克（Dani Rodrik）是这一总体趋势的一个例外，他在最近的一篇评论中认为，地缘政治的后果比卷土重来的保护主义要严重得多。他提出了一个重要的观点；尽管如此，人们必须记住，保护主义是当今地缘政治紧张局势升级的主要催化剂。

特朗普的关税扭转了贸易自由化的长期趋势，也提高了美国消费者和使用从中国进口的中间投入品的美国公司所面临的价格，给美国经济带来了真实代价。但特朗普的政策对全球贸易总体影响不大。美国和中国之间的贸易如预期下降，但许多其他国家的出口—— 包括对美国和世界其他地区的出口——有所增加。贸易流被重新分配，并不是减少了。

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0 Comments on this paragraph, 7 Comments on this article

George Dourakis Sep 24, 2023

The article is very interesting, but it completely misinterprets the view expressed by Dani Rodrik. Rodrik argues that the intensification of geopolitical competition has led to protectionism and retreat of (hyper)globalization. But he considers this development to be a good thing, because it allows national economies to pursue domestic macroeconomic policies tailored to their own needs. By contrast, during the three decades prior to protectionism, the macroeconomic policies of national states were tailored to the needs of (hyper)globalization, not to their own needs. From now on, Rodrik argues, if the global economy performs badly, it will be the fault of geopolitical tensions and not of (selective) protectionism. Protectionism -contrary to the prevailing view endorsed by Koujianou- is good both for national economies as well as the global economy. In other words, no evil (geopolitical tensions) is without good (protectionism). At least as long as geopolitical tensions do not get out of control...

Now, as far as the causal relationship between protectionism and geopolitical confrontation is concerned, I think that both Pinelopi Koujianou and Dani Rodrik are partly right. It all started with the global credit crisis of 2008. The credit crisis turned into an economic depression and then, with the intervention of the states -that spent huge amounts of money to save their banking system and their real economies- into a fiscal crisis (sovereign debt crisis). In order to avoid fiscal collapse, the major countries adopted austerity policies, which as we know, hinder economic recovery. Thus, the only way left for recovery was to increase exports. So all countries at once tried to increase their exports and run trade surpluses. But in a global economy characterized by insufficient demand brought about by the crisis, international trade inevitably becomes a zero-sum game. Each country tries to increase its exports (and reduce its imports) at the expense of the others. The result is protectionism and trade wars.

To summarize, the crisis started as a bank-credit crisis (phase one), then it hit the real economies, i.e., turned into an economic recession (phase two), it then took the form of a fiscal crisis, i.e., it became a debt crisis (phase three), and finally it created conditions conducive to protectionism and trade war (phase four). However, before protectionism in the form of tariffs and trade wars kicks in, geopolitics had already been at work. As a matter of fact, in 2013 China announced the ambitious Belt and Road Initiative (also known as The New Silk Road), by which it made clear that it was challenging America's global hegemony. The US got the message and realized that henceforth China is no longer a strategic partner and should be treated as a strategic competitor.

The Obama administration has tried to limit China's influence by relatively mild economic means. That is, by economic agreements that did not include China, the first and best being the Trans-Pacific Partnership (TPP). But Trump withdrew his country from that agreement and adopted more aggressive, trade war, practices by imposing tariffs on imported Chinese goods. In 2017, he officially declared China a strategic competitor, while announcing a major increase in military spending to make his country stronger than ever. The geopolitical rivalry intensified with the coronavirus health crisis and culminated with Putin's war in Ukraine. In this geopolitical pandemonium, the intensification of protectionism and the retreat of globalization are inevitable.

My concluding remark is that favorable conditions for the emergence of protectionism and trade wars had already begun to occur in the fourth and last phase of the 2008 global economic crisis. But the US-China geopolitical rivalry intensified before protectionism and trade wars could emerge. Americans had soon enough realized that with the turn globalization had taken, China had become their major adversary. So it was only natural to treat it as a key strategic rival threatening to take the lead. Therefore, geopolitical tension is the independent variable and protectionism is the dependent variable. The difference is that Dani Rodrik suggests that (selective) protectionism is good both for the nation states and the global economy, whereas Pinelopi Koujianou argues that it is the major source of all the evils, and it could eventually lead to a military conflict.
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Dawood Mamoon Sep 20, 2023

Great Article Professor Pinelopi,

Yes Protectionism was the precursor to current US-Sino Geo Political crises. Even the de risking argument may not be a good one to continue defending trade war with China because it implicitly assumes that China is not going to develop and contribute to new technologies that are so necessary for Chinese defense related needs. Most of the articles that are written on Sino-US trade war have primarily highlighted political and economic woes of China and CDC. For example China should be a democracy to become a high income country. Or CDC is promoting state enterprise and thereby less efficient market structure. However there is no mention of Chinese capabilities in STEM. China is indigenously developing quantum computers. There are already global synergies with Chinese companies for Industrial 4.0 revolution. Secondly, during World War II, Germany did remarkably well to develop technologies and same is true with USSR during cold war. Therefore I do accept that technological niche does not confirm stability, though many developing country experiences show that it is also true with democracy (e.g. Pakistan) or market economy (services lead growth spurts in many developing countries during first decade of 21st century).

So what US government really fighting for to initiate a trade war with China. Think Asia would prevent any negative externalities for China US trade war. Further a below average economist like me is even concluded that Chinese trajectory for economic prosperity is still there only if China doesn't invade Taiwan and secondly would allow both Taiwan and Hong Kong continue with its democratic ways of governance.

You so amicably have already mentioned that due to billion dollars of tariffs, American consumers would pay higher prices because basic trade theory confirms that Made in America would still be expensive for all those foreseeable green tech. products.

The best message from your article is that China-US trade war is a political gimmick at best initiated by Trump administration. And at the least, it is to bring jobs back to America as against the phenomenon of Creative Destruction usually promoted by Professor Acemoglu.

Though it is pertinent to mention that a third party is here and that is Artificial Generative Intelligence (AGI) that is going to dominate the world in few years time.

China should be self reliant though it defies the logic of International Trade that has given so much to world both in US, Europe and China.

Thereby Geopolitics is the problem as said by you and Professor Rodrik. Directing positive outcomes of Geopolitics emanating from Protectionism (Economic grievance) is the future.

Assuming China keeps a status quo regarding Hong Kong and Taiwan, there can be a potential of cooperation between US and China on something that I consider the most prized realization of 21st century and that are Sustainable Development Goals and SDGs go beyond economic growth and provides a comprehensive model for global prosperity.

Making a global South an economically prospering nation states would be a great motive for cooperation. And yes developing green technologies and introducing them for world prosperity is another area to cooperate.
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vic lai Sep 20, 2023

It can also be argued that " Geopolitical Fire first Started Protectionism," and protectionism in turn aggravates the geopolitical fire.
What's been interesting in macroeconomics is that, the cause and effect of something happening therein isn't always entirely clear, some or even most of the time, and so, depending on one's chosen (political) stance, one usually chooses the suitable causality for the sake of one's own argument.
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Looking at US's economic history, we observe that trade protectionism had always been the country's chosen main national policy ever since her indepenence in the 18th century, particularly in the years following the country's Civil War in the 1860s, when protectionist industrial victorious Northern America, against the interests of free-trading cotton-producing defeated Southern America, continued to practise trade protectionism to well protect their domestic northern industries against competition from Europe.
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Only after WWII in the 20th century, and particularly after the demise of the USSR Empire and the start of the Internet Revolution in the 1990s, did the US become globally dominant and confident enough to keep preaching globalization-on-steroids-supported free international trade to the rest of the world, and particularly to those still-developing EM countries through the help of the Washington Consensus.
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In recent years, the same country, always governed by Deweyan practicality, started to change course once again, only to better suit her own new best overall interest.
The above said, I think many people in the West will still continue to regard the neoliberal-free-trade age in the past decades as the norm that should be sustained, rather than just a ripple in the country's long economic history.
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I always think that economics should be renamed political economy ------ this social science's original good old name prevalent in the 19th century.
If so, the persistent mutual interactions between a country's pure economy and Machiavellian politics will no longer look so awkward to us.
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- vic lai Sep 20, 2023
  
  Similarly, one can correctly argue either that
  (i) many high-savings EM countries have been financing non-saving US's trade deficit every year,
  or that
  (ii) the US has been financing many other net-exporting (internal-demand-deficient) EM countries to practise exports-oriented economic growth year-in and year-out.
  -
  Like what's been said upstairs, the causality runs both ways, depending ultimately on your own point of view, or on your own argument you want to put forward.
  ---
  The US had trade deficits with 101 countries in 2015, including China of course.
  But contrary to the misleading claims of the world's rebalance economists, the US doesn't inescapably rely on foreign savings to finance her own deficient (private) savings.
  Those economists are wrongly putting the cart in front of the horse.
  -
  It's rather (or also the case) that the US households and private companies, which are willing and able to borrow and deficit-spend in their country en masse, almost year-in and year-out, that have helped finance the foreign EM countries' net exports to the US every year (ie, have helped to sustain their massive yearly trade surpluses against the US), and so
  (ai) sustaining the US's massive trade deficits year-in and year-out, and
  (aii) enabling the foreign net-exporting EM countries like China to be able to accumulate more and more US-dollar FX reserves every year.
  -
  The Global Financial Crisis of 2008 shows that, without the US households' precarious and persistent accumulation of more and more debts of their own, the US alone is now no longer rich enough in the coming years to keep acting as the world's unique consumers of last resort, to satisfy all the net savings demand of more than 100 other countries in the world.
  -
  Unless the US government always chooses to accommodate, that is, by appropriately ------ and equally importantly, correctly ------ deficit-spending en masse every fiscal year in the foreseeable future.
  But doing so requires the US government to become ever more and more indebted over time, which may not be sustainable in the long run given the higher and higher interest-rate environment in the country, especially if the US Fed doesn't give a helping hand through her more frequent use of inflation-prone new-money-printing QEs in the coming years.
  ---
  Other more sustainable ways to help rebalance the world economy --- and to sustain non-protectionist free-trade globalization in the foreseeable future, are
  (bi) to encourage or enable the other wealthy advanced countries (like Germany and Japan, and other wealthier DM and EM countries) to supplement the US, by starting to act also as the other major consumers of last resort on this planet, to help the other poorer EM countries to grow more quickly, and so to escape the poverty-trap, through proven-to-be-effective exports-led growth,
  (bii) to convince China(-et-al) to gradually forsake her good old race-to-the-bottom and hence can't-get-very-rich exports-led growth model in the rest of this century.
  ---
  - vic lai Sep 20, 2023
    
    The following, written ("too-prematurely") by Henry C.K. Liu on October 12, 2007, still applies to today's China:
    -
    "Thus China is trapped into a trade regime operating on an international monetary architecture in which it must continue to export real wealth in the form of underpaid labor and polluted environment in exchange for US dollars that it must reinvest in the US.
    Ironically, the recent rise of anti-trade sentiment in US domestic politics offers China a convenient, opportune escape from dollar hegemony to reduce its dependence on exports to concentrate on domestic development.
    Chinese domestic special interest groups in the exports sector would otherwise oppose any policy to slow the growth in exports if not for the rise of US protectionism which causes short-term pain for China but long-term benefit in China’s need to restructure its economy toward domestic development.
    Further trade surplus denominated in US dollar is of no advantage to China."
    -
    (China's ongoing alternative use of part of her lavish remaining US-dollar FX reserves to help finance her Belt-and-Road infrastructure project is also inadvertently helping the US dollar to conquer ever more promising Eurasian land.)
    ---
    This means, like today's Japan and Germany, which have relied on their own exports-oriented economic models for almost half a century, China will also find it extremely hard to wean herself from the addicted and path-dependent exports-oriented economic growth in the foreseeable future.
    But the first major weaning step must be taken by China, no matter how difficult it is to do so ------ better late than never.
    ---
    - vic lai Sep 20, 2023
      
      Today, given all those trade tariffs and trade-decoupling policies unilaterally imposed by the US on China in recent years, it's quite surprising for one to see that today's China still continues to give ample exports tax rebates to her country's (re-)exporters every fiscal year.
      -
      Beijing's decision-makers can seriously consider cancelling all the exports tax rebates given to the (re-)exporters in China (which is perhaps about 1 trillion yuan every year), particularly those given to the American FDI multinational enterprises which have been manufacturing their products in China and then re-exporting them back to the US.
      (Those having left China as a result of aggravating US-instigated reshoring or friend-shoring will no longer be able to receive such handsome tax rebates from the Chinese government in the future.)
      -
      Doing so can reduce China's trade surpluses, especially those against the US.
      Since some of the US big multinationals are monopolists or oligopolists, they may be able to pass the burden back to the foreign final consumers, by raising their import prices both in the US and in other advanced DM importing countries.
      If so, China's trade surpluses, and hence the domestic employment opportunities, will drop by an amount (much) smaller than initially expected.
      -
      Cancelling the exports tax rebates can also significantly improve China's fiscal budget balance, by lowering her overall government fiscal deficits every year.
      The money so saved can be used to
      (a) replenish the country's social security funds,
      (b) increase the subsidies given to the schools in the country,
      (c) invest more in the farm and water infrastructures in the rural villages,
      (d) construct more toll-free highways connecting every important location of the country,
      (e) fund the consumption coupons given free to the unemployed and low-income (young) people, who can use the coupons only domestically to buy the (surplus) products and services supplied by the country's excess-capacity-ridden SOEs and SMEs.
      ---
      One of the most miraculous economic phenomena we are observing today is that, China keeps on subsidizing heavily those spend-spend-spend US consumers who in turn not only never reciprocate, but are also actively doing whatever it takes, however maliciously, to further harm or demonize her !
      ---
      - vic lai Sep 20, 2023
        
        What really matters for the US isn't the true causality between protectionism and geopolitical fire, but the potential persistent decline in global competitiveness of more and more US multinational companies, especially relative to their quickly rising and challenging Chinese counterparts.
        -
        Take the face-to-face boxing-fighting-like competition for global market share between Apple's iphones and Huawei's most advanced cellphones in recent years.
        The US government's unabated technology and other sanctions of all kinds unilaterally imposed on China's Huawei during that period of time, has also been hurting non-trivially Apple Inc's overall global competitiveness relative to her closest quickly-chasing (and now already-surpassing) Chinese challenger, thereby showing us once again that the road to hell is indeed paved with sincerity.
        -
        It's like a young boy's too-caring parents constantly giving unnecessary protections of all kinds to their child while he's mostly growing up in a comfortable greenhouse-like home, so that he ultimately becomes ill-equipped to go out to compete successfully with other people in the real world while having to face all kinds of bad-weather days.
        ---
        
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