China’s economy is slowing down. Current forecasts put China’s GDP growth this year at less than 5 percent, below the forecasts made last year and far below the high growth rates that China enjoyed until the late 2010s. The Western press is filled with China’s supposed misdeeds: a financial crisis in the real-estate market, a general overhang of debt and other ills. Yet much of the slowdown is the result of US measures that aim to slow China’s growth. Such US policies violate WTO rules and are a danger to global prosperity. They should be stopped.
The anti-China policies come out of a familiar playbook of US policymaking. The aim is to prevent economic and technological competition from a major rival. The first and most obvious application of this playbook was the technology blockade that the US imposed on the Soviet Union during the Cold War. The Soviet Union was the US’ declared enemy and US policy aimed to block Soviet access to advanced technologies.
The second application of the playbook is less obvious, and in fact, is generally overlooked even by knowledgeable observers. At the end of the 1980s and early 1990s, the US deliberately sought to slow Japan’s economic growth. This may seem surprising, as Japan was and is a US ally. Yet Japan was becoming “too successful,” as Japanese firms outcompeted US firms in key sectors, including semiconductors, consumer electronics and automobiles. Japan’s success was widely hailed in bestsellers such as Japan as Number One by my late, great colleague, Harvard Professor Ezra Vogel.
In the mid-to-late 1980s, US politicians limited US markets to Japan’s exports (via so-called “voluntary” limits agreed with Japan) and pushed Japan to overvalue its currency. The Japanese yen appreciated from around ￥240 per US dollar in 1985 to ￥128 per dollar in 1988 and ￥94 to the dollar in 1995, pricing Japanese goods out of the US market. Japan went into a slump as export growth collapsed. Between 1980 and 1985, Japan’s exports rose annually by 7.9 percent; between 1985 and 1990, export growth fell to 3.5 percent annually; and between 1990 and 1995, fell to 3.3 percent annually. As growth slowed markedly, many Japanese companies fell into financial distress, leading to a financial bust in the early 1990s.
In the mid-1990s, I asked one of Japan’s most powerful government officials why Japan did not devalue the currency to re-establish growth. His answer was that the US would not allow it.
Now the US is taking aim at China. Starting around 2015, US policy-makers came to view China as a threat rather than a trade partner. This change of view was due to China’s economic success. China’s economic rise really began to alarm US strategists when China in 2015 announced a “Made in China 2025” policy to promote China’s advancement to the cutting edge of robotics, information technology, renewable energy and other advanced technologies. Around the same time, China announced its Belt and Road Initiative to help build modern infrastructure throughout Asia, Africa and other regions, largely using Chinese finance, companies and technologies.
The US dusted off the old playbook to slow China’s surging growth. Former US president Barack Obama first proposed to create a new trading group with Asian countries that would exclude China, but presidential candidate Donald Trump went further, promising outright protectionism against China. After winning the 2016 presidential election on an anti-China platform, Trump imposed unilateral tariffs on China that clearly violated WTO rules. To ensure that the WTO would not rule against the US measures, the US disabled the WTO appellate court by blocking new appointments. The Trump administration also blocked products from leading Chinese technologies companies such as ZTE and Huawei and urged US allies to do the same.
When US President Joe Biden came into office, many (including myself) expected Biden to reverse or ease Trump’s anti-China policies. The opposite happened. Biden doubled down, not only maintaining Trump’s tariffs on China but also signing new executive orders to limit China’s access to advanced semiconductor technologies and US investments. US firms were advised informally to shift their supply chains from China to other countries, a process labeled “friend-shoring” as opposed to offshoring. In carrying out these measures, the US completely ignored WTO principles and procedures.
The US strongly denies that it is in an economic war with China, but as the old adage goes, if it looks like a duck, swims like a duck and quacks like a duck, it is probably a duck. The US is using a familiar playbook and Washington politicians are invoking martial rhetoric, calling China an enemy that must be contained or defeated.
The results are seen in a reversal of China’s exports to the US. In the month that Trump came into office, January 2017, China accounted for 22 percent of US merchandise imports. By the time Biden came into office in January 2021, China’s share of US imports had dropped to 19 percent. As of June 2023, China’s share of US imports had plummeted to 13 percent. Between June 2022 and June 2023, US imports from China fell by a whopping 29 percent.
Of course, the dynamics of China’s economy are complex and hardly driven by China-US trade alone. Perhaps China’s exports to the US will partly rebound. Yet Biden seems unlikely to ease trade barriers with China in the lead-up to the US’ election next year.
Unlike Japan in the 1990s, which was dependent on the US for its security and so followed US demands, China has more room for maneuvering in the face of US protectionism. Most importantly, I believe, China can substantially increase its exports to the rest of Asia, Africa and Latin America through policies such as expanding the Belt and Road Initiative. My assessment is that the US attempt to contain China is not only wrongheaded in principle, but destined to fail in practice. China will find partners throughout the world economy to support a continued expansion of trade and technological advance.
Jeffrey D. Sachs is a university professor and director of the Center for Sustainable Development at Columbia University and president of the UN Sustainable Development Solutions Network. The views expressed in this column are his own.
The closure of the Strait of Hormuz has sent the vast Asian chemicals industry into a tailspin. Deprived of the likes of Qatari natural gas and Saudi Arabian oil, the region’s fertilizer and plastics plants are slowing production or even shutting down. Everywhere except China, that is. In petrochemicals, China is unique. As well as a traditional industry that uses oil and gas as feedstock, it has parallel output that relies on its abundant domestic coal. Unsurprisingly, India and other regional powers want to copy and paste the Chinese method. This would not be easy — or climate friendly. The
KMT Chairwoman Cheng Li-wun’s (鄭麗文) recent visit to Beijing and her upcoming visit to Washington will serve as a high-level test of her diplomatic mettle. In Beijing, Cheng was received with symbolic gestures, a warm reception, and high-level access. In Washington, she will receive far less pomp and far sharper questions about the KMT’s vision for the future of Taiwan. Her challenge will be to persuade Washington that the KMT’s engagement with China can coexist with strong deterrence. Cheng’s April 7-12 visit to mainland China coincided with an intense period of conflict in Iran. Despite the strategic significance of Cheng’s trip,
History might remember 2026, not 2022, as the year artificial intelligence (AI) truly changed everything. ChatGPT’s launch was a product moment. What is happening now is an anthropological moment: AI is no longer merely answering questions. It is now taking initiative and learning from others to get things done, behaving less like software and more like a colleague. The economic consequence is the rise of the one-person company — a structure anticipated in the 2024 book The Choices Amid Great Changes, which I coauthored. The real target of AI is not labor. It is hierarchy. When AI sharply reduces the cost
US President Donald Trump recently repeated his claim that “Taiwan stole America’s chip industry,” reigniting public debate on the issue. As a former Taiwanese minister of economic affairs and an entrepreneur deeply involved in semiconductor supply chain development, I feel a responsibility to clarify this misunderstanding. From the perspective of global industrial evolution and the economic principle of comparative advantage, such a statement appears overly simplistic and risks obscuring the essence of the issue. The rise of Taiwan’s semiconductor industry was not built on “replacing America,” but rather emerged as a result of countries pursuing different development paths within the
RSS