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America’s Emulation of China Calls for New Rules

As the United States pursues industrial policies to serve its own national interests, and as China sticks with its state-driven economic model, cooperation will not be the order of the day. But it could become a bit easier if both sides recognized that their policies are neither too different nor necessarily harmful to each other.

CAMBRIDGE – It is common to think of US-China tensions as the inevitable result of stark differences between the two countries. The United States has a fully capitalist market economy, whereas the Chinese government keeps a strong hand on the economic tiller. For all its faults, the US is a democracy, whereas China is a single-party regime that brooks no political challenge. Though the US remains the world’s most powerful country, China’s growing economic and geopolitical might threatens American hegemony.

But while all that is true, many US-China conflicts stem from their increasing commonalities. America’s relative decline has made it feel more insecure, prompting economic and national-security policies that are reminiscent of China’s own decades-long strategy of prioritizing national economic strength and renewal over the requirements of an open, “liberal” global economy. Paradoxically, as the US emulates strategies that served China quite well, the strains in the bilateral relationship multiply.

Even though China turned toward markets after 1978 and significantly liberalized its economy, the Communist Party of China’s policies reflected more than the pursuit of economic growth. They were part of a national project of rejuvenation designed to re-establish China as a major power. Consequently, China played the globalization game by its own rules, sheltering and promoting its own industries while leveraging external markets. The state was never too shy to step in and subsidize what it saw as strategic industries (either from a commercial or national-security standpoint).