Opinion | The US is revelling in Chinas economic troubles at its own peril
US President Joe Biden was sufficiently unrestrained (if not quite so country-specific as to mention China by name) when he warned that “when bad folks have problems, they do bad things”. Those are hardly the words of a major power leader who is supposed to exercise statesmanship and balance.
Fortunately, some others have adopted a more balanced view. One of those is Lyric Hughes Hale, a Chicago-based journalist who publishes the Hale China Report and who in January predicted that China’s economy would take time to recover from Covid-19 lockdowns – a sensible prediction given the depth of the downturn.
Hale, who with her late husband, economist David Hale, launched China Online, is not alone in this regard. Nicholas Lardy, a China economy specialist at the Peterson Institute for International Economics (PIIE) in Washington, also believes that the pessimism on China has been overdone.
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Lardy notes in a recent PIIE commentary that a consensus has emerged among economists, journalists and analysts that China’s troubles “portend a far more serious long-term problem derived from flawed, insular, Communist Party-controlled policymaking” in response to the Covid-19 pandemic.This popular assessment is probably premature and perhaps wrong, Lardy says. He acknowledges that China faces many challenges – including restrictions on the transfer of technology imposed by the United States and other countries, a property bubble correction and high unemployment among younger workers. But he argues that a “careful reading” of the situation “does not support the view that China’s growth is now gripped by a severe cyclical downward spiral that will persist for several years”.
Another defender of China’s position is James K. Galbraith, a professor at the University of Texas, Austin, who effectively demolishes many of the arguments put forward by what can best be termed the brigades of China bashers, who are in full cry right now.
In a recent article, Galbraith, formerly a chief technical adviser for macroeconomic reform to China’s State Planning Commission, dismisses claims that China’s difficulties stem from problems such as a high savings rate, vast bank deposits and a growing need to boost consumption.Western economists, he notes, were promoting a similar line 30 years ago to China, to invest less and consumer more. This mantra, he says, “made no sense to me then, and it still doesn’t today”.
“Should China have more cars but worse roads and fewer gas stations? … Does the population need more food and clothing, even though it was already mostly well-fed and decently dressed three decades ago?” he asks. These are rhetorical questions, to be sure, but they address issues that are frequently ignored by the more unthinking critics of China.
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Many analysts are so focused on the sport of China baiting that they appear to overlook the fact that the slowdown in trade that is now confronting the global economy with the spectre of recession has been brought about more by US than Chinese actions.
Tariffs and other trade restraints introduced in blunt form by former US president Donald Trump and then “refined” and expanded by President Joe Biden have been aimed chiefly at China but, insofar as they have been effective, they have also succeeded in hurting many countries that depend on strong import demand from China.
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The world simply cannot thrive and grow in the atmosphere of protectionism and mistrust that is being actively engendered now by an essentially defensive West. On the contrary, the road currently being travelled can only lead to increasing economic difficulty, social suffering and perhaps even confrontation.
A good start to rescue and redemption would be to end the stream of petty and spiteful rhetoric that seems to pour forth almost daily from the West towards China and which often prompts Beijing to respond in a similar vein. This requires from political leaders what their title implies – leadership.
A situation of economic criticism and conflict (not at all the same thing as healthy competition) can all too easily provide an excuse and encouragement for physical confrontation, and who will dance on whose grave in that event is an open question.
Anthony Rowley is a veteran journalist specialising in Asian economic and financial affairs
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