China needs trade improvements far more than the US does
Tom Rogan
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In the latest high-level U.S. engagement with China, Commerce Secretary Gina Raimondo is visiting Beijing. The intent of her visit is twofold. First, to improve lines of communication and avoid mutually undesirable confusion. Second, to pursue a tentative strengthening of U.S.-China trade.
Beijing wants us to think that it is the U.S. side that needs improved trade the most.
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As the Global Times propaganda newspaper argued on Monday, “Tian Yun, a Beijing-based economist, said even though the United States still seeks to contain China, U.S. officials are also fully aware that they need China to help boost the U.S. domestic economy, which is crucial for U.S. officials ahead of elections next year. ‘They need better economic figures, and for that, they need to stabilize ties with China, in terms of economy and trade.'” The newspaper added that “Some foreign media outlets have been hyping grim outlooks for the Chinese economy amid some challenges, but Chinese policymakers have moved swiftly to tackle various challenges.”
This assessment represents a reality which exists only in Chinese Communist Party dreams.
While it’s true that China’s economic growth rate will be higher than that of the U.S. in 2023, comparisons between these two figures are ultimately a distraction. What matters most is that where U.S. economic indicators are broadly strong, China’s economic indicators are inherently negative.
In China, consumer confidence has plummeted, a real estate crisis has produced massive debt, and a saturation of supply and youth unemployment is soaring (so much so that China has stopped publishing statistics on this concern). Perhaps most ominous for Beijing, foreign investment is falling. Xi Jinping bears significant personal blame for these challenges, often adopting self-destructive economic policies. The Chinese leader apparently believes, for example, that raiding foreign businesses somehow encourages foreign investment. China also suffers from major structural economic challenges such as rural vs. urban wealth/opportunity imbalances, a rapidly aging population and declining birth rate, and the risk of being stuck in the middle income trap. Xi’s greatest fear is that these challenges will translate into growing public disenchantment with Communist Party rule.
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At the same time, while Xi and his crony American allies such as Pat Gelsinger and Larry Fink are desperate to see relief from U.S. technology export restrictions, those restrictions are set to stay. The Biden administration and bipartisan majorities in Congress recognize that they are of critical importance toward mitigating China’s use of Western technology in the strengthening of its military.
Put simply, Raimondo has the cards in her favor. Beijing is delusional to pretend otherwise.