I spent much of the past two years on the staff of the White House Council of Economic Advisers, thinking about U.S. trade policy toward China. Many people, including me, were focused on the economics of this issue. Many still are.
The blow-by-blow of the bout between the world’s two economic heavyweights is easy to follow. The world’s stock markets gyrate in response to the trade news of the day; the U.S. dollar falls versus the Chinese yuan, and the president responds. Each new piece of macroeconomic data is interrogated until it mumbles something about tariffs. Even the Federal Reserve has weighed in.
But the economics of the U.S.-China trade dispute will never tell its full story. Sooner or later, the current U.S.-China trade conflict will be resolved, and either the U.S. or China will be seen as the winner, in terms of direct economic consequences.
The trade dispute, though, is now about much more than economics—it’s testing whether a democratically elected government can prevail in the face of the authoritarian government of the world’s most populous country. And everyone who values democracy or human rights should hope that, one way or another, the United States ultimately prevails in that struggle.
The sound and fury that now accompany the release of any new U.S. economic data signify something less than even the data themselves would suggest. Each release of gross-domestic-product data from the Bureau of Economic Analysis is probed for evidence of the trade conflict’s effects. Yet even the best methods of interrogation will yield at least some untruths: Within months, the BEA itself will almost certainly consider this initial “advanced” GDP data to be wrong. Each quarter’s initial GDP estimate is typically revised by the BEA twice within three months, and four times within five years.
Meanwhile, as last quarter’s growth rises and falls by percentage points, the future of democracy hangs in suspense. The advanced GDP numbers are ephemeral, but the broader consequences of the trade battle will prove more lasting.
China’s response to U.S. trade actions appears to reflect a cynicism about the efficacy of democracy. Beijing’s strategy appears calibrated to exploit the fact that the American people elect the head of their government, by attempting to influence how the American people will vote. In effect, it seems to be gambling on its ability to turn American democracy against itself.
At the center of China’s responses are the tit-for-tat tariffs intended to hurt American farmers, a constituency that tends to support President Donald Trump and to live in crucial swing states. These tariffs appear designed to deliver political pain in the U.S., not to produce any economic benefit for China. China’s other political meddling, as Vice President Mike Pence recently laid out, includes attempts at interference in the 2018 U.S. midterm elections. Recent targets of Chinese Communist Party influence campaigns also include state and local governments, Congress, academia, think tanks, and the business community.
Now, according to Trump, China may be simply sitting and waiting for the clock of America’s own democracy to tick until he faces reelection.
The strategy that China now seems to be displaying in the U.S. can be deployed to punish elected leaders around the world for any number of reasons. China could utilize a variation of this strategy in a confrontation over any issue a country with an elected leader might have with Beijing, from trade abuses to human-rights violations.
If the U.S. is ultimately perceived to have lost the trade conflict, the leaders of democracies around the world will take notice. They will learn that confronting Beijing risks provoking a campaign of democratic destabilization—one that was successful elsewhere. They will need to weigh that risk against the potential rewards. China could point to the U.S. trade conflict to remind democracy’s leaders of this peril. And if any such leaders defiantly forged ahead, Beijing could draw on a playbook sharpened from its U.S. experience.
China’s victory, then, would bring about a world in which democracies are enfeebled and the largest autocracy is emboldened.
Some Americans disagree with the Trump administration’s criticisms of China’s economic practices and, as a result, its decision to challenge them at all. Many criticize the Trump administration’s tactical use of tariffs on economic grounds. But a Chinese victory in the trade conflict, now, would damage democracy and human rights regardless of the economics of the initial trade issues themselves.
Many critics of Trump allege that he has undermined the values of liberal democracy. If critics wish to bolster those values, though, and secure a brighter future for democracy and human rights, they should hope that Trump prevails in his showdown with China.
The dismal science of economics has much to say about economic relations between China and the United States. But the worst possible legacy of this trade conflict would not necessarily be dismal for reasons familiar to places such as the Council of Economic Advisers. It would be dismal because it makes the world safer for China’s authoritarianism and more dangerous for elected leaders who dare to challenge its malign behavior.
Regardless of your views on Trump, if you value democracy and human rights, some things are worse than giving the Trump administration a win. A victory for China in its trade conflict with the U.S. is now one of them.
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