Former U.S. Treasury secretaries Henry Paulson and Robert Rubin offer an interesting perspective on U.S.-China relations in the latest issue of The Atlantic.
The relationship between the United States and China involves cooperation and competition, but recently the latter has received more attention. Much of the mistrust between the two countries has its roots in geopolitical tensions—China’s assertive behavior in the East and South China Seas, for instance, or U.S. naval surveillance off China’s coasts. But economic tensions have played a large role as well.
Discussions of the U.S.-China economic relationship too often begin with a recital of each country’s grievances against the other. The usual litany of American criticisms includes China’s management of its exchange rate, subsidies that benefit state-owned enterprises, and barriers to American companies seeking to operate in China. Another prominent critique involves Chinese cyber-hacking of U.S. businesses’ intellectual property, and China’s failure to protect intellectual property more generally.
For its part, China castigates the U.S. for its irresponsible fiscal trajectory, its political opposition to Chinese investment in American companies and infrastructure, and its export-control laws, especially those restricting the export of technologies with potential military applications.
We believe it’s time to turn the typical exchange of economic critiques on its head. The two countries have largely been engaged in a dialogue of the deaf, each blaming the other for its own failings, exerting pressure on the other to accede to its demands, and too often waiting for the other to act first. In fact, it is in each country’s self-interest to meaningfully address the criticisms made by the other.
The greatest American threat to China’s economic future is the possibility that America’s economic success could come to an end; the greatest economic danger China poses to the U.S. is the chance that China’s economy fails to grow. By contrast, if each country gets its own house in order and thus succeeds economically, that should diminish economic insecurity, which generates friction, and increase confidence about the future, which fosters a constructive relationship. As former U.S. Treasury secretaries with long experience working with China, we believe each country should undertake significant reforms. Seriously considering each other’s criticisms is a good way to begin.
Among the ideas that deserves quite a bit of attention: free trade.
