Fort Report: Reckoning with China

May 17, 2019
Fort Report

I have been to China once.  I found the Chinese people welcoming and warm.  The academic conference I attended with Chinese officials was thorough and thoughtful.  At a break, I walked over to the conference area window and looked out.  It was a very strange site––­­like fog had set in mid-day; but it wasn’t fog, it was pollution.  The air was so thick you could barely see.  Studies show that if you live in Beijing, air pollution takes several years off your life. 

As bad as it is, the pollution signifies a deeper problem—a polluted economic relationship between our countries.  It’s foul, dirty, unclear, and it needs to be cleaned up. 

Chinese trade practices hurt America.  China sells America around $540 billion worth of stuff.  America sells China around $120 billion worth of stuff.  The full impact of the imbalance can be debated, but it is clearly structurally unfair.  Let’s be brutally honest: Americans want low prices, China delivers; American farmers depend on new markets for their products, China buys.  There is, however, an uglier side to this dance.  Through draconian joint venture mandates, restrictions on foreign investment, corporate espionage, and forced technology transfers, China prevents American companies from even remotely righting the imbalance.  China’s outright theft of intellectual property alone causes huge losses to our country.

More than trade is at play.  Recently, Secretary of State Pompeo appeared before my Subcommittee on State and Foreign Operations.  I asked him, “Mr. Secretary, how much does China give in foreign assistance?”  Clearly, the Secretary didn't have a ready answer and I didn't intend to receive one.  It was a rhetorical question.  I said, “I don’t expect you to answer, Mr. Secretary, because the amount is minimal.”

For a country like China, with the prodigious size of its economy, its military might and growth, its pervasive and transactional global activity, especially in developing nations, this power should invoke a set of responsibilities.  The United States generously provides about $25 billion a year in non-security assistance alone: helping the poor, creating food security, sustainable agriculture, conservation, and medical care for the world’s sickest.  We do this because it is our humanitarian impulse.  We do it because it facilitates relationships, economic and cultural.  We do it for our own national security to prevent conflict.  Stable societies are secure societies.

Given its long history of invasions, poverty, and repression under Communist rule, China’s raison d'être seems invested in an unyielding economic nationalism, a capitalist-communist hybrid that devours resources, produces excess stuff, and extends its long reach across the world.  Economics is important to us too, but it stands alongside a spectrum of values that includes personal liberty, the free exercise of opportunity, and the ability to engage in free associations.

In a recent speech before the House of Representatives, I waded into the litany of concerns about China, along with a call for some self-examination about our own role in the present dysfunction.  Taking advantage of lax environmental laws, unfair labor provisions, and new trading rules started in the 1990s, manufacturing moved to China, causing massive dislocations throughout America.  Now, China makes the stuff; we buy the stuff.  We run up debt; they have our cash; they buy our debt.  We find ourselves in a dysfunctional marriage of tense codependency.  

Ever marching toward the glory of more riches, China exploits resources, wrecks the environment, and ignores the demands for just governance around the world.  But, we just keep buying. 

The hard truth is: It’s time for American businesses to do business in America.  Unfair trade for the short-term gain of America's industrial complex will not bring about a healthy economic or diplomatic future for two great powers.  This means hitting the pause button and quickly resetting the conditions for reciprocally beneficial trade.  It also means mutual understanding, mutual respect, and mutual responsibility.  As the Chinese told me, there is room enough in the Pacific for both of us.