US Should Re-Examine Trade with China and Russa

By JASON SIBERT

Recent events in international relations should make one question the dogmas of the post-Cold War foreign policy establishment.

When Soviet Communism fell in the early-90’s many believed the future would be defined by the democratic republic, a nice thought. The People’s Republic of China plays a role in the United States’ victory in the Cold War by switching sides in the Sino-Soviet split. The PRC went through a reform phase in the late 1970s ,when the Communist state adopted portions of a capitalist economy. Many thought the march toward a free-market economy would continue and that China would become democratic in time.

Boy was the foreign policy establishment ever wrong! China and Russia are back in the same orbit, the Shanghai Cooperation Organization. Today’s realities prove the limits of economic interdependence as a method of pursuing peace, as stated by writer Dale C. Copeland in his story “When Trade Leads to War: China, Russia, and the Limits of Interdependence” at ForeignAffairs.com Aug. 23.

Both China and Russia rely on trade for economic growth and to secure their positions on the world stage. The PRC has managed to quintuple its GDP over the last two decades in large measure through the export of manufactured products; more than 50% of Russia’s government revenue comes from the export of oil and gas. It seems as if trade relationships can serve as the cause of war, not a deterrent. As Copeland says, the threat of military action, or military actions, does not always lead to a rupture of economic relations. He suggests we look at the way economic relations impact the United States’ relationship with Moscow and Beijing.

Realist theory, or the idea that states pursue their own interests, helps us understand the world we live in. From a realist standpoint, trade can do much good for a nation-state. It can make nations more wealthy and technologically sophisticated. This explains why Japan after the Meiji Restoration and Chain after the death of Mao grew economically. However, trade also increases the chances that a country will be vulnerable to trade embargos from other countries. Japan had a trade predicament in the 1930s as it saw France, the United Kingdom and the United States retreating into increasingly closed economic realms.  Japanese leaders found themselves compelled to expand Japan’s control over its commercial ties with its neighbors. Yet they also came to see that such moves made them only look more aggressive, giving the United Kingdom and the United States new grounds for restricting Japanese imports of raw materials, including oil.

To understand today’s PRC, one must look at its economic relationship with Taiwan. China’s economy is based on international trade in several items while Russia’s is based on natural resources (energy). This makes Russia’s economy harder to impact with sanctions. China’s economic dependence could lead it to take military action if its trade is impacted in some way, as stated by Copeland. He said: “take the case of Taiwan’s high-tech semiconductors. China now has some capability to produce chips with transistors that are under 15 and even under ten nanometers in size. But to stay on the cutting edge of technological developments in artificial intelligence, self-driving vehicles, and smartphone production, it needs chips measuring under seven or under five nanometers, which only Taiwan can mass-produce at a high level of quality. The latest Apple iPhone, for example, although it is assembled in China, uses an Apple-designed five-nanometer chip that is made by Taiwan Semiconductor Manufacturing Company in Hsinchu, Taiwan.”

In the 1930s, Japan’s position in the world was connected to access to American and British oil. The country found America’s oil embargo too much to deal with, and then it tried to cripple America by bringing it into World War II. If the US were to place sanctions on the PRC like the sanctions on Russia, it might provoke an invasion of Taiwan. By reassuring Beijing that the PRC will continue to receive semiconductors from Taiwan—even if not the sophisticated machines from the Netherlands needed to make them—the Joe Biden administration can moderate Beijing’s concerns about future trade and reduce the likelihood of crisis and war. An attack on Taiwan would leave China isolated on trade, and this would lead to a less secure PRC.

Great powers sometimes turn to trade to maintain peace. However, this is a more delicate balancing act that is sometimes realized. One portion of the balancing act is in the hands of less dependent states like the US. Our country cannot signal to other states that we are trying to keep more dependent states down. A better approach would be to push rising powers such as the PRC to level the playing field by ending practices such as currency manipulation, subsidies, and the illegal appropriation of foreign technology while assuring these states that if they act moderately in their foreign policies, they will continue to enjoy access to the resources and markets they need for economic growth and domestic stability.

The key to peace is not total free trade but fair trade.

Jason Sibert is the Lead Writer for the Peace Economy Project in St. Louis, Mo. Email jasonsibert@hotmail.com.

From The Progressive Populist, October 1, 2022

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