Now you might think, with that title, that I’d be delving into Trump 2.0. Well, not exactly in the first instance. Instead, I am trying to focus on the end of the Biden administration: what folks conclude about the Biden initiatives and where that then leads, possibly, for the upcoming Trump administration. Now, to be clear, I’m not trying to guess where the Trump administration is likely to take us. Not with the inconsistent Trump at the helm again; but it would be good if the incoming administration might choose to take a hard look at what the Biden administration hoped to achieve with its policy initiatives and where, in fact, it found itself in the increasing disorder in the international system. We are particularly interested, not surprisingly, in the state of US-China relations in the face of four years of Biden strategy and policy. What has China done in reaction to Biden strategic competition? And what does the United States do now in the face of today’s US-China competition?
Just the other day, Tom Friedman from the NYT gave us a peek of what he saw in a recent visit to Beijing and Shanghai. Where is China today in the face of the challenging US relations: the end of US engagement, the rise in tensions with Trump 1.0 and the Biden strategic competitive policy. Friedman in an opinion article titled, “How Elon Musk and Taylor Swift Can Resolve U.S.-China Relations” makes “no bones about it” and early in the opinion piece he writes:
I just spent a week in Beijing and Shanghai, meeting with Chinese officials, economists and entrepreneurs, and let me get right to the point: While we were sleeping China took a great leap forward in high-tech manufacturing of everything.
And he starts with Trump 1.0:
If no one has told Donald Trump, then I will: His nickname on Chinese social media today is “Chuan Jianguo” — meaning “Trump the (Chinese) Nation Builder” — because of how his relentless China bashing and tariffs during his first term as president lit a fire under Beijing to double down on its efforts to gain global supremacy in electric cars, robots and rare materials, and to become as independent of America’s markets and tools as possible.
What Trump 2.0 now faces in today’s China that he helped to create is, according to Tom:
The China that Trump will encounter is a much more formidable export engine. Its advanced manufacturing muscles have exploded in size, sophistication and quantity in the last eight years, even while consumption by its people remains puny.
China’s export machine is so strong now that only very high tariffs might really slow it down, and China’s response to very high tariffs could be to start cutting off American industries from crucial supplies that are now available almost nowhere else. That kind of supply-chain warfare is not what anyone, anywhere needs.
Further, Tom signals what a Trump administration must now do in the face of much more evident competitor:
But if we don’t use this time to respond to China the way we did to the Soviet Union’s 1957 launch of Sputnik, the world’s first artificial satellite, with our own comprehensive scientific, innovative and industrial push, we will be toast.
So for Tom what it requires is a ‘full court press’ – ‘A Sputnik Moment’ by the US under a second Trump administration. Hmm, if really required one has to wonder if given today’s US politics there is anything even somewhat similar to that much earlier, “all hands on deck” type US strategy.
Tom Friedman, however, is not the only one calling for a concerted US national effort to deal with a charging China that the US helped to create. More focused on the technology/science/innovation front is the examination by my good colleague Scott Kennedy from CSIS. Scott is senior adviser and Trustee Chair in Chinese Business and Economics at the Center for Strategic and International Studies at CSIS and recently he examined the US-China technology competition in Foreign Affairs, in an article titled, “How America’s War on Chinese Tech Backfired And Why Trump’s Plans Would Make Things Even Worse.
But just before going there I thought it was worth setting up that examination by focusing on probably one of Joe Biden’s last public talks as President, this at Brookings in Washington, just a few days ago on December 10th. The remarks were titled by the White House as, “His Middle-Out, Bottom-Up Economic Playbook”. There was a fair bit of coughing and missing words in the transcript but the message was clear enough:
Today, here at Brookings Institution, I would like to talk about pivotal actions we’ve taken to rebuild the economy for the long haul, you know, and how we’re — how we’re at a critical, in my view, moment in the direction the economy is going to take.
After decades of trickle-down economics that primarily benefited those at the very top, we — we’ve written a new book that’s growing the economy — the middle-out and the bottom-up — that benefits, thus far, everyone. And that’s going to be the test with go- — going forward.
I was determined to restore U.S. leadership in industries of the future.
We understood we needed long-term investments for the future. Investing in America agenda, which includes my Bipartisan Infrastructure Law, CHIPS and Science Act, the Inflation Reduction Act — together, they mark the most significant investment in America since the New Deal. And that’s a fact. I mean, whether it’s good or bad, that’s the fact.
We not only — we not only beat the pandemic; we broke from the economic orthodoxy that has failed this nation, in my view, for a long time — a theory that led to fewer jobs, less economic growth, and bigger deficits.
And the best way to build that in America was to invest in America, invest in American products and invest in the American people — not by handing out tax breaks to those at the top.
But the tools employed by the Biden administration, as described by the President, barely touched the protections initiated by Trump 1.0 and advanced further in some cases by the Biden administration. But Scott targets exactly those initiatives by the Biden administration, particularly in the technology innovation sectors. As he describes:
Washington’s array of tools is highly expansive: export controls, tariffs, product bans, inbound and outbound investment screening, constraints on data flows, incentives to shift supply chains, limits on scholarly exchange and research collaboration, industrial policy expenditures, and buy-America incentives.
The goals of these measures are equally diverse: slow China’s progress in the most advanced technologies that have dual-use potential, reduce overdependence on China as a source of inputs and as a market for Western goods, deny China access to sensitive data, protect critical infrastructure, push back against economic coercion, protect the United States’ industrial competitiveness, and boost its manufacturing employment.
And he concludes by arguing:
Beijing’s shift toward a more expansive and assertive form of mercantilist techno-nationalism poses genuine risks to the prosperity and economic security of the United States and others. Something must be done, to be sure, but Washington’s increasingly restrictive policies have yielded highly mixed results.
So it’s not that China doesn’t pose a challenge but the solutions chosen by the Biden administration, in part built on the earlier Trump years, raise serious concerns and pose real questions in the face of Trump 2.0:
As President-elect Donald Trump returns to power, his administration would be wise to reflect on the fact that existing restrictions on Chinese technology have yielded decidedly mixed results. The Biden administration has described its strategy as a “small yard, high fence,” or placing high restrictions on a small number of critical technologies. That yard is already growing, with negative unintended consequences for the United States.
What then can be done, according to Scott. It seems to be in several parts. First, according to him:
Washington needs to set clear priorities, identifying the most urgent threats that deserve a response. Otherwise, the United States will be dragged into a game of whack-a-mole or, more worryingly, try to block all commercial ties with China. To the extent that the United States attempts to deny technologies to China, the only sustainable approach involves working with allies and other countries so that the United States will not be outflanked by China and lose technology leadership in the rest of the world. If the Trump administration pursues extensive decoupling from China, the result will most likely be an isolated, poorer, and weaker United States.
And additionally Scott targets international organizations and multilateral initiatives:
The Trump administration would also be unwise to ignore global institutions, such as the World Trade Organization, as doing so would dramatically raise the likelihood of unbounded conflict. Instead, Washington should intensify multilateral cooperation to set new rules for global economic activity in order to avoid a race to the bottom. The United States may in some instances need to take unilateral steps to maintain its relative technology superiority, but excessive economic security measures will mean less innovation, slower economic growth, reduced profits, and fewer jobs. With a combination of wise domestic policies, collaboration with allies, and investment in international institutions, the United States can achieve both prosperity and security.
This latter focus is welcome, it seems to me. As bad as some of the Biden tariff and sanction approaches have been, certainly the dismantling of the WTO trade and investment policies stand out, in particular, because earlier administrations were vital to the creation of the multilateral trade framework. While it was, and is imperfect, as any multilateral instrument is, it is a ‘damn sight better’ than where we are today. Geneva at the moment is dead.
But it is not just the economy/technology front that demands apparently a concerted Trump administration effort. There is also national security. The message, it seems, is being delivered by one of the key figures over decades, that is none other than Senator Mitch McConnell.
I plan to return to Senator McConnell, and a number of others on national security, after the holiday break. But it is holiday time and I plan to put down my pen for the holidays. Look for me back here at Alan’s Newsletter in the week of January 6th – 2025, if not earlier. Have a great Holiday time!
Image Credit: USNews.com
