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When the Cold War ended in 1990 and the Soviet Union collapsed a year later, America relaxed and basked in the new reality that the United States had emerged as the world's sole superpower. For a full decade, from 1991 to 2001, Washington was in a position to tell the rest of the world how it should conduct its affairs. It was called "American hegemony."
The euphoria changed abruptly on September 11, 2001 when New York's World Trade Center and the Pentagon were attacked with aircraft highjacked by al-Qaeda terrorists. This dramatically demonstrated that the United States was vulnerable to non-nuclear attacks. Then, on September 15, 2008, the world economy was severely shaken by a U.S. banking crisis that damaged America's reputation as an economic superpower.
During this period, 2001 to 2008, China's economy began to boom. A major factor was its admission in 2001 to the World Trade Organization (WTO), with full support from the United States. The expectation was that China would accept the WTO's rules that guided the world toward free trade among the major trading powers. American companies' investments in China expanded and U.S. imports of Chinese goods skyrocketed. One result was that many American jobs were lost. Soon China emerged as an economic powerhouse and competed with the U.S. and Europe for markets around the world. It benefited from low prices on its exports, which critics argued was the result of manipulation of the exchange rate. Since 2001, China's economy expanded has nine-fold.
When Donald Trump became president, he met with China's President Xi Jinping to initiate negotiations on what Trump called "fair trade" to reduce America's. ballooning trade deficit with China. Their meetings in Florida and Beijing were characterized by promises and goodwill. But American trade negotiators were frustrated that Chinese officials refused to make significant concessions. As a result, Trump decided in June to impose tariffs on a limited number of Chinese imports and threatened more unless Beijing negotiated seriously and stopped forcing U.S. companies to share their technology.
Vice President Mike Pence, in a major foreign policy speech on October 4, declared what pundits called an "economic cold war" on China. He accused Beijing of major violations of WTO rules and engaging in unacceptable trading practices and interfering in U.S. elections. The new hard-line view of China is summed up in this quotation from Pence's October 4 speech: "America had hoped that economic liberalization would bring China into greater partnership with us and with the world. Instead, China has chosen economic aggression which in turn has emboldened its growing military." The vice president was acknowledging that presidents George W. Bush and Barack Obama and the American business community were naïve in thinking they could entice the Chinese into the western trading system by offering them WTO membership.
Trump's economic advisors have concluded that being patient with China has not worked. They think that time is not on America's side if another year goes by without imposing tough sanctions on Beijing and persuading its officials to negotiate a fair trade deal. Currently, the U.S. occupies a strong position because of its expanding economy. In addition, America is far less dependent on trade with China than China is with the U.S. But without a significant change in the trade imbalance, Trump's economic team fears that China will outpace America as the world's largest economy in another decade.
A larger worry, especially in the Pentagon, is how far China intends to go militarily in pressing its territorial claims over East Asia's waterways. This strategic threat was highlighted by China's belligerent tactics recently against U.S. warships transiting the South China Sea, and by its interference in Japan's territorial waters. Beijing claims these large areas as China's historic sphere of influence, but Washington supports the claims of Vietnam, the Philippines, and Malaysia who say China threatens their territorial waters. It also leads a coalition of naval powers--Australia, Japan, Britain, France, and potentially India--that wish to uphold international law and resist attempts by China to restrict transit of the South China Sea.
Will Trump's confrontation with China on trade issues lead to military conflict, or will it persuade Beijing to negotiate seriously? My guess is that Beijing will choose negotiations. But its rapid naval buildup suggests it is preparing for conflict, as it pursues its goal to be the hegemonic power in Asia.
File last modified on Wednesday, 7-NOV-2018 12:30 AM EST