Kicking away the Chinese ladder
Christopher Soelistyo examines the US-China trade war from a historical perspective, and predicts that China will stand strong in the face of Trump’s protectionist trade policy.
Since early 2018, the United States has imposed a series of tariffs and sanctions on China in a bid to rectify the yawning trade imbalance between two of the world’s largest economies. China has responded in kind, launching a spiralling “trade war” that seems to have no clear end in sight.
To justify its coercive trade policies, the Trump administration has accused China of “unfair” practices such as industrial subsidies and violation of intellectual property rights. These are the very policies that have launched China on its meteoric rise to power over the last four decades, giving the trade war a strong existential dimension for China’s leaders.
However, it seems unlikely that Washington’s strong-arm tactics can coerce Beijing into capitulating to Trump’s demands – at least in the long term. The reasons are three-fold. First, China’s leadership can afford to play the long game, whereas Trump is inevitably under pressure to obtain results before the 2020 election. Second, Chinese leader Xi Jinping has made strengthening China a core mission of his leadership and a source of his legitimacy.
Third, and most intriguingly, many of the same “unfair” policies now under criticism from the Trump administration were ironically used by the United States itself in the course of its own development. The leadership of the Chinese Communist Party are keen students of history, and they are more inclined to follow not what Washington has said, but what it has done. To understand how these strands come together, we must first take a brief look into Chinese history.
As Henry Kissinger notes, for most of its five-thousand-year history, China “was never obliged to deal with other countries or civilizations [sic] that were comparable to it in scale and sophistication”. As such, China never treated foreign civilisations as equal entities, but as tributaries. China was the hegemon, not quite in the military sense, but culturally and politically. It was the centre of gravity, the definition of civilisation itself. Of course, this was an illusion inculcated by centuries of relative isolation – an illusion that would soon be shattered by contact with the West.
In 1839, Great Britain launched a successful military attempt to pry open Chinese markets to the opium it was growing in Bengal. Thus began a century of humiliating defeats at the hands of foreign powers. It lost a second “Opium War” (1856-60) to Britain and France, then a war with Japan (1894-95), followed by the Japanese annexation of Korea (1910), which had long been a Chinese tributary. In the process, Hong Kong and Taiwan would be torn from Chinese sovereignty, a mark that continues to haunt China to this day.
The disasters of the late nineteenth century would precipitate the fall of the last Chinese dynasty (1911), ushering in a sham democracy which in effect dissolved into a contest between rival warlords. Imperial Japan would take advantage of Chinese disunity to occupy and annex northeast China (1931), which it would then use as a launching pad to invade the rest of China in 1937. With American help, the Chinese were able to expel Japan, but only at the cost of fifteen million Chinese lives.
Thus, after thousands of years of hegemony, China was plunged into a “Century of National Humiliation”. And so, for the past few decades, a key source of legitimacy for the ruling Communist Party has been its role in pulling China out of its state of weakness and re-establishing it as a proud and powerful nation.
Historian John Garver notes that over the course of its existence, the Communist Party has used three primary themes to legitimise its rule over the Chinese people. Under the rule of Mao Zedong (1949-76), this was the attainment of Communism. Mao waged a continuous revolution at home and abroad, exemplified by his collectivisation of agriculture and industry, his ruthless ideological rectification campaigns, and his aggressive foreign policy. Yet the implementation of Communism at home – exemplified by the “Great Leap Forward” economic plan (1958-61) – brought not utopia, but disaster and privation for the Chinese people.
Disillusionment with Communism among the Chinese people rendered it untenable as a mode of legitimation. Hence, the rule of Deng Xiaoping (1978-92) saw the Communist Party make a complete U-turn and base its legitimacy on improvement in China’s standards of living. He decentralised Mao’s planned economy, de-radicalised his foreign relations, and opened up trade with the West. Yet there was the ever-present threat that economic liberalisation would generate demand for political liberalisation as well.
This demand exploded into the protests of spring 1989, when students occupied Tiananmen Square in Beijing to demand political reform. It was a close call for the Chinese Communist Party, who were forced to call in the military to violently suppress the protests. More importantly, it alerted the CCP of the need to insulate the Chinese mind from liberal Western concepts such as “democracy” and “human rights”.
Thus, Chinese propaganda began to brand these concepts as tools of “ideological subversion”, which the hostile West was using to weaken China. The victim narrative of China’s century of humiliation – that the great Chinese people had always been unfairly persecuted by foreign powers – was brought again to the fore. The Communist Party switched tack, and now based its legitimacy on protecting China from a hostile world, as it continues to do to this day.
Thus, China needed to be strong. It needed a powerful military, but more importantly, it needed a developed economy. China’s leaders took a page from the history books and pursued policies that the governments of developed countries, including the United States, had used in their own ascents to power. Sure enough, economist Ha-Joon Chang has shown that that history contains a long record of industrial subsidies and violation of intellectual property rights.
State interventionism goes back to the Founding Fathers, who themselves were ardent supporters of government-led development. Alexander Hamilton, who served as the first US Treasury Secretary, was a strong advocate of industrial subsidies to promote domestic “infant industries”, protecting them from foreign competition. Particularly important were “strategic industries” such as oil and transportation.
Then there’s intellectual property rights. In the past, developed countries such as Germany, Britain, and the US have been rampant thieves of intellectual property, often stealing from each other. American industry certainly benefited from transfers of technology from industrialising Britain to be protected under US patent law. These transfers were outlawed by the British, who jealously guarded their technological prowess by banning the outflow of machinery and skilled workers until well into the 19th century. US copyright law did not even recognise foreign copyrights until 1891, much to the chagrin of Charles Dickens, who called it a “monstrous injustice”. Of course, that’s not to single out the United States – patent law elsewhere tended to be worse.
Trump’s trade war thus appears as an exercise in “kicking away the ladder” – to borrow the title of Chang’s book. Once at the top, strong powers punish weaker powers for pursuing the same policies that got them there. “Kicking away the ladder” seems to be a pervasive theme in world history more broadly.
We see a clear example in the current regimes of nuclear non-proliferation, which see the UN security council punish states for developing nuclear weapons. This is despite the fact that every permanent member of that council possesses nuclear weapons and refuses to give them up. Similarly, the Trump administration is now punishing China for pursuing policies that America itself had relied on during its rise to power.
However, China will not let anyone kick down their ladder. A recent example is the handover of Hong Kong (1997). In the Treaty of Nanking (1842), Hong Kong Island was ceded to Great Britain “in perpetuity” after China’s defeat in the first Opium War. However, Deng Xiaoping unilaterally judged the treaty to be invalid and threatened Margaret Thatcher with a military invasion of Hong Kong. To save face, the British finally gave in and agreed to the handover in a 1984 joint declaration. The message was clear: from now on, China would play by its own rules.
So, what does this say about the China of today? We have a Communist regime that has staked its legitimacy on increasing Chinese power in the face of a hostile world. We have an aggrieved nationalism that blames China’s problems on foreign aggression. And finally, we have a US trade policy that seeks to punish China for trying to attain what it sees as its rightful place.
Moreover, China’s leaders can afford to play the long game – it can afford to “wait it out” until Trump’s term expires, or until his policies deal more harm to the American voters than they are willing to put up with. Yet the Chinese Communist Party is here to stay. The upshot of this is that China’s leaders are simply too resolute to be coerced by US protectionism. Trump may have waded into a quagmire from which he cannot escape.