EDITORIAL: If the free market is to work, the U.S. must deal with China’s belligerence

OPINION:

The United States and China are drifting into a trade war, and it’s worrying almost everybody. It’s a peculiar war, compared to such struggles of previous centuries. Its importance is sometimes minimized in importance because of the blind spots both countries have for one another. Neither country seems to have an adequate appreciation of the other’s very different environment.

Such blindness has been seen before. The United States and its allies won the Cold War, all right, but it was despite an often vast ignorance of Soviet decision-making and how its leadership worked. It’s ironic, as well as a little bit more than outrageous, that China is girded for combat with the United States while enjoying a $360-billion trade surplus with the United States, extorting technology from American companies and successfully seducing high-tech giants Apple and Google.

It is not only insulting but damaging. The Chinese even cultivate the effrontery to ask environmental relief from the most advanced countries for their pollution of the environment, and China is the world’s greatest polluter.

When Apple reported that China’s slowing economy contributed to its own late-year sales slump, the news rattled the stocks of other major U.S. companies with extensive operations in the world’s second-largest economy. Now, as U.S. companies report their quarterly earnings, China’s impact will be revealed. The extent of the damage will depend on such factors as who the company’s customers are and how much competition it faces in China.

On one hand, the Trump administration has been pretty clear about its view of China. A 2017 national security strategy document called China a “revisionist” power, attempting to reorder international politics to suit its interests. That’s a pretty succinct way of describing Beijing’s military buildup, its attempts to undermine American influence and power, its retaliations against American allies such as Canada, and other economic factors.

The U.S. economy and national security have been threatened by China’s strategy since President Xi Jinping took office in 2012, adopting what translates as “civil-military fusion.” Chinese and foreign “civilian” companies serve as de facto suppliers for the Chinese military’s technological-industrial base. Residents and visitors are subject to constant surveillance, reflected in credit scores affecting everything from their home purchases to job opportunities. These forms of social control often use technology developed by Western companies.

But even if American exports to China fall by half, it would be the equivalent of less than one-half of 1 percent of U.S. gross domestic product. There are other countries that can substitute for China-based production, none of them strategic rivals and trade predators. Previous efforts to assert America’s influence against China, such as the discarded Trans-Pacific Partnership, did not push back effectively on Chinese economic aggression. Working with allies to directly address China’s malfeasance would do that.

All this means putting China at the top of American international economic priorities and keeping it there for years, without overstating or overreacting to trade disputes with allies. The administration must not be distracted by the next round of China’s false promises.

Protecting innovation from Chinese attack makes the United States stronger. Hindering the Chinese security apparatus makes external aggression and internal repression more costly for the greedy in Beijing. China is America’s only major trading partner that is also a strategic rival, and it should be treated differently than friendly countries with whom the United States have disputes. If the United States wants the global free market to work the way it should, it must deal with Beijing’s belligerence.