Another round of U.S.-China trade talks have been set and irrational exuberance seems to be already taking hold. Yet, as much as we want an actual deal to be achieved in October, desire alone can’t overcome 3,000 years of Chinese history.
To understand why the Chinese are so reluctant to agree to a U.S.-defined outcome, we should look beyond economic rationality and consider the role that power and control have played in shaping Chinese society. Progress in China’s closed society can be painfully slow, and the key to achieving lasting progress is to ensure that the Chinese people themselves find value in making those changes.
Indeed, power and control have dominated the minds of the Chinese ruling elite for millennia. And it’s for this very simple reason that the Trump Administration’s efforts to force structural reform in China have been so complicated from the onset. China has benefited tremendously from theft of intellectual property and breaking international trade norms, and this will likely continue after the trade dispute is ultimately resolved.
In China, transition of power has rarely come peacefully, and history is replete with examples of toppled regimes and foreign invasions. This is one of the reasons why modern Chinese history is characterized by economic development at all costs — regardless of the impact on the environment or human rights.
Historically, the purpose of Chinese society control differed from what we’re used to in the West. According to Richard Nisbett, the highly capable author of The Geography of Thought, the purpose of control is to reinforce harmony so that individuals can be better integrated into society and obey the requirements of the State.
After 3,000 years of following this thought pattern, it doesn’t seem likely that we will see an about-face in the next 30 days. In order to make progress in trade talks, the Trump Administration shouldn’t try to boil the ocean by seeking structural change — it won’t happen on our timeline. Instead, hold a firm line on core U.S. priorities while building a coalition of like-minded partners so that China can’t divide and conquer.
Remember, China focuses on power and control better than anyone else, and if we continue to go at it alone, China will win. After all, China is more than happy to sell Huawei products to anyone willing to buy, and agricultural products can be obtained from other producers in Europe or South America if not from the United States. While negotiating with China is notoriously difficult, success is possible, particularly when faced with unified opposition. For example, in 2014, China relented on onerous and prejudicial banking regulations when confronted by a coalition of U.S., EU, and Japanese governments and businesses united in opposition. This model can and should be replicated in today’s trade war environment.
To view China independent of its long history of power and control is to fundamentally misunderstand China. With the 70th Anniversary of the founding of the People’s Republic of China right around the corner on Oct. 1, China is unlikely to make significant unilateral concessions.
Nien Su is CEO of Artemis ESG. He is a trustee of the US-Asia Institute and former George W. Bush Administration appointee. He previously served as Chief Economic Advisor on the House Foreign Affairs Committee.
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