William Priest explains for Barron’s why a trade agreement will not mean the end of conflict between the United States and China.
The trade truce between the U.S. and China has been well received by markets. But the conflict is bigger than trade or even tech. At stake are the values that will determine the architecture and governance of the global economic order. …
… Under President Xi Jinping, China has ramped up policies inconsistent with free and fair trade. He has entrenched the state’s leading role in the command economy, demonstrating zero interest in compromising tenets of its economic system. Markets are increasingly taking a secondary role to the Chinese Communist Party’s commands, including its “Made in China 2025” strategy to dominate the technologies of the future. Xi has also developed a sophisticated surveillance state to stifle dissent. The Belt and Road Initiative, a plan to bind regional economies to China, makes it clear that Beijing seeks to radically overhaul the U.S.-led global order.
The Trump administration’s trade deal marks the end of the dream of convergence. Integration into the global economy was hoped to make China not just wealthier but also more democratic and market-oriented. Now, the question is whether China will export its authoritarian values to the West.
Vice President Mike Pence tacitly acknowledged the onset of Cold War 2.0 in an October 2018 speech. China is engaged in a “whole-of-government” offensive against the U.S, he warned. Pence was particularly critical of China’s plans to dominate industries such as robotics, biotechnology, and artificial intelligence. Not since the late 1940s has America’s mood swung so rapidly behind the idea that the U.S. faces a new ideological and strategic rival.
