Misery Loves Company
China and the US are very different, but their problems are the same
Richard Nixon’s brilliant strategy to reopen relations with China in order to isolate the Soviet Union has just about come undone. Also at risk: the renewed economic ties that were a side bonus of Nixon’s diplomatic efforts. They produced a practical partnership that created breakneck economic development in China, directly benefiting the US and the world economy.
Once enthusiastic business partners, the world’s first and second largest economies have been at loggerheads for years. China and Russia have grown closer, not further apart, and today there is no way to talk about US-China policy without referencing Russia’s war in Ukraine. Sanctions, which often punish the innocent and enrich targeted parties, have become common practice.
As recent trade statistics indicate, despite increasing political strains economic interdependency has not in fact weakened. America’s high propensity to consume combined with Chinese willingness to save, produce and to underwrite American debt has kept trade flowing. Even in the post-Covid economy, those synergies are still in effect.
Moreover, although the two cultures and governments are quite distinct, in some ways the limits to growth they face are very similar in both cause and effect. Efforts to work together have been overshadowed by hostile exchanges and bellicosity on both sides. Recent official pronouncements by China seem to be signaling renewed openness to international cooperation.
I have seen evidence of a pivot in my own interactions and discussions as well. China seems to be reopening but will multinational companies in the US, Japan and Europe walk through the door? Will they be stopped not by China, but by their own governments who perceive China as a threat and therefore prioritize strategic interests over economic prosperity? China itself is unwinding its previous similar position because of its negative economic toll.
The broader question is whether this deteriorating relationship can be reversed in order to focus not just on business opportunities, but mutual challenges. If China increases military aid to Russia, the answer is definitely no. Even if China were able to broker a peace deal between Russia and Ukraine, would that be enough to convince the China hawks in Washington to back down or reinstate the status quo? An analysis of this scenario in the New Yorker How the War in Ukraine Ends with Stanford historian Stephen Kotkin is a must read. If China is able to play a beneficial role, it would bring Nixon’s mission full circle, this time with China as the big brother.
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