“Understanding China since Nixon”

From Project Syndicate, by Shang Jin Wei: On February 21, 1972, Richard Nixon became the first US president to visit the PRC, setting in motion a process that would end China’s decades-long isolation and it would relaunch the rise of a modern and dynamic economy.

But despite the seismic economic changes in China over the ensuing half century, many Westerners see today’s People’s Republic as an unreformed communist country whose unfair trade practices harm Western workers and consumers. While this impression is partly a byproduct of current geopolitical competition, it also reflects a lack of historical perspective.

At the time of Nixon’s visit, China was as isolated and isolated from the world as North Korea is today. Ordinary Chinese did not have the freedom to choose where to work and had to accept jobs assigned by their local government. Almost all Chinese adults worked for the state or in a state-owned company, since neither domestic private companies nor foreign companies operated in the country. Nixon’s entourage also noted a surprising lack of color in the streets, with most Chinese wearing blue or green. There was not a single foreign brand on the streets of Beijing or Shanghai.

read also : The meeting between Nixon and Mao at the age of 50

Aujourd’hui, les Chinois peuvent choisir leur lieu de travail, more than 80% of the main-d’œuvre is employed by des appartenant pas à l’État et les salaires sont determinés par l’offre et la demande sur The labor market. An international tourist cannot tell from people’s clothes alone if he is in Shanghai, Seoul, Tokyo or Taipei. Virtually every major global brand that can be seen in New York, London and Singapore is also ubiquitous in major Chinese cities.

Apple, Boeing, Caterpillar, Starbucks and many other foreign companies are currently doing good business in China, supporting the returns of US mutual funds and pension funds that invest there. General Motors sells more cars in China than in the United States or any other market. AND Chinese companies wholly or majority owned by foreign investors account for 40% of Chinese exports.

At the time of Nixon’s visit, the most important border control policy of the Chinese government – ​​as in Allemagne de l’Est à l’époque or in Corée du Nord maintenant – était d’empêcher les Chinois ordinaires de fuer le country for good In 2019, the last year before the start of the Covid-19 pandemic, 150 million Chinese tourists visited the United States, Europe, Southeast Asia and other regions, and returned home voluntarily. The personal freedom enjoyed by ordinary Chinese today was unimaginable in 1972.

China’s transformation did not result in Milton Friedman’s kind of capitalism, in which the state plays a minimal role in the economy. But China has adopted many regulatory institutions similar to those of Germany, Japan, and even the United States. The Chinese Food and Drug Administration, created in 1998, is partially inspired by its US counterpart. And the design of its State Environmental Protection Administration (now called the Department of Ecology and Environment) was influenced by that of the United States Environmental Protection Agency.

Even China’s much-criticized industrial policy was inspired intellectually by Alexander Hamilton, who pioneered the concept. The China 2025 program, which aims to promote what the Chinese government sees as the industries of the future, bears less resemblance to Soviet central planning than the German Industry 4.0 initiative or even the many American industrial policies.

So was Nixon right to help China reconnect with the world? Dans la mesure où sa visit et les politiques américaines que ont suivi ont contribué au succès de la China à sortir un miliard de personas de la abjecte poverty, it is difficult to think of a separate initiative that aurait pu faire plus pour promote the well- human being.

Of course, that was not the motivation for Nixon’s diplomatic coup, which strengthened the US hand in its fight against the Soviet Union. But just as importantly, though often overlooked, American households and businesses have benefited enormously from China’s economic boom.

US exports to China have grown faster than US exports to Europe, Japan, Mexico, Canada, Brazil, or Australia over the last three decades. While imports from China appear to have contributed to the decline in manufacturing jobs in the United States, employment and value added in modern American service sectors have grown faster, as low-priced Chinese goods such as laptops and electrical equipment, increased efficiency.

To be sure, cheaper Chinese goods helped keep commodity prices low in Western economies from the 1980s until recently. And during the period of heightened US economic engagement with China, there has been no secular rise in US unemployment.

Former US President Donald Trump’s misguided trade war with China implies a reversal of these trends. By raising tariffs on Chinese imports to the level that prevailed under the Smoot-Hawley Tariff Act before World War II, Trump ensured that American households and businesses faced higher prices than they otherwise would have. . The US trade deficit has widened rather than narrowed, in part because US companies are losing competitiveness in the global market due to the trade war.

As US policymakers are tempted, for geopolitical reasons, to end the policy of economic engagement with China pursued by successive administrations in the decades since Nixon’s 1972 visit, the risks are significant. The American standard of living would probably rise more slowly. As Chinese economic growth suffers, support for American institutions and ideals among many ordinary Chinese could also wane.

If a US disengagement strategy accelerated China’s strategic rapprochement with Russia, perhaps even culminating in a formal alliance, a combination of Russia’s nuclear arsenal and China’s mighty economy could present a more daunting challenge to hegemony. global american.

Fifty years after Nixon’s historic visit, China-US relations are at a historic low point. Although finding common ground with China seems difficult in the current geopolitical context, the logic that China’s involvement in the world can enhance the personal freedom of the Chinese people and also bring benefits to American households and businesses remains truer than ever.

Shang-Jin Wei, a former chief economist at the Asian Development Bank, is a professor of finance and economics at Columbia Business School and Columbia University School of Public and International Affairs.

Copyright: Project Syndicate, 2022.
www.project-syndicate.org

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