In the aftermath of the Communist victory in the late 1940s, the question often asked in Washington was: “Who lost China?” That fueled the McCarthyite inquisition that followed. The question our children might ask is: “Who lost America?”
The long-running side-show around Russian “collusion” focused on the nasty but largely inconsequential ties between some of Donald Trump’s more sleazy aides and their equally disreputable Russian or Ukrainian counterparts. Yet, compared to China, Russia represents at most a pesky but fundamentally second-rate power; Russia’s GDP is smaller than that of South Korea and barely a tenth of China’s. . . .
Until Trump, many influential voices tended to be soft on China. Some have seen China’s capitalist growth as a confirming the efficacy of market systems, and means to encourage some semblance of liberal democracy to the Middle Kingdom. This logic has collapsed given the increasingly obvious mercantilist and authoritarian nature of the regime.
China’s wealth has won it many prominent allies from both parties, including former GOP Speaker John Boehner, who have signed up to defend China’s interests. Wall Street investors and many of our leading manufacturing companies — notably Apple — have benefited massively from China’s inclusion in the World Trade Organization in 2001. Since 1990 the United States deficit in trade goods with China has ballooned from under $10 billion annually to $419 billion last year. China’s ratio of imports to exports was four to one in 2018.
This trade, one can argue, has benefited American consumers. But it hasn’t come without costs, including the loss of an estimated 3.4 million jobs in the U.S. since China’s admission to the WTO.
It has also hurt many companies, particularly in technology. American firms in China, either as part of their entry fee to the country’s market, or through surreptitious means, have been forced to surrender the historic advantages of our innovative economy; the Chinese government, as one observer noted, encourages its large companies to work as “patriotic thieves.”