C. Fred Bergsten - The United States vs. China

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C. Fred Bergsten

polity

Copyright © C. Fred Bergsten 2022

The right of C. Fred Bergsten to be identified as Author of this Work has been asserted in accordance with the UK Copyright, Designs and Patents Act 1988.

First published in 2022 by Polity Press

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ISBN-13: 978-1-5095-4736-4

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In October 1993, President Bill Clinton was preparing to host the first-ever summit of leaders of the top powers of the Asia Pacific region: China, Japan, South Korea, Indonesia, and a dozen others, along with the United States. I briefed him at the White House on the main recommendations of the Asia Pacific Economic Cooperation (APEC) forum’s Eminent Persons Group, which I chaired: that the upcoming meeting agree to establish a “community of Asia Pacific nations” that would seek to achieve “free and open trade and investment in the region by 2020.” The President agreed with those proposals and led their unanimous approval at the summit a month later, accelerating the integration and expansion of the most dynamic region of the world economy. 1

Before deciding to do so, President Clinton asked the question that is even more central to US and global economic policy today than it was then: will China simply take the huge opportunities that have been offered to it, to benefit from an open world economy and access to the world’s most important markets, and then “tell us bye-bye when they no longer need us?” Like seven other US presidents before and after him, Clinton decided to gamble on engaging with China – at a time when the United States, basking in the glow of winning the Cold War, was near the peak of its global economic power and leadership position, and China was still in the early stages of its stunning rise.

A number of Americans, including former President Trump, now believe that was a huge mistake and want to reverse the policy. They fear that China will overtake the United States as a regional and even global power, and represents an existential threat to its world leadership, perhaps even its national security. They argue that “the China shock” and many of China’s policies are severely damaging the US economy. They worry that the American model of market economics and democratic politics may give way to China’s state capitalism and authoritarian rule. They conclude that China must be confronted and contained. The trade wars from 2017 could be just the start of prolonged and escalating hostilities between the economic superpowers.

China is indeed rising rapidly. Its economy is already larger than that of the United States on some measures, and is growing at least twice as fast. It is the world’s largest trading country and, by far, holder of foreign exchange reserves. It has accounted for a quarter to a third of total world growth for more than a decade – far more than the United States. Its technological capability is growing rapidly and already rivals the United States in such keys areas as the Internet and artificial intelligence (AI).