La geopolítica, sin duda, está
en auge en esta era de líderes autoritarios, en pleno declive del
multilateralismo y de la visión normativa de la escena global que parecía
afirmarse en los 90, pero que se ha puesto en cuestión a inicios de este siglo.
·JESÚS E.
MAZZEI ALFONZO
29/08/2024 05:00 am
Temas de actualidad y que para mi persona están siempre sobre el tapete
luego de la reelectura del artículo del historiador español Jorge del Palacio,
a raíz de una entrevista del destacado académico Francis Fukuyama sobre
populismos y Democracia, en la era de la globalización afirma Fukuyama
“… Creo que el auge del populismo es sólo un aspecto en la evolución de la
democracia moderna. Pero no cuestiona nada seriamente…”. Y, además, por las
implicaciones geopolíticas de algunas elecciones, en el contexto europeo sobre
todo como la reciente elección en Francia y el Parlamento Europeo, que presenta
y la cercana elección en los Estados a menos de 70 días, presenta un escenario
incierto en la relación ambivalente con occidente, cercana a Rusia con Hungría,
que hoy preside en la presidencia rotatoria UE y la autocratización de la
democracia turca y el problema de los populismo de izquierda en América Latina
y su manejo del poder y el quiebre de la alternabilidad democrática y el
problema de autoritarismos en la democracias de América Latina, que no
solamente hace que se conviertan en democracias iliberales, sino también, en
regímenes autoritarios de nueva conceptualización o una nueva tipología, más
allá de Guillermo O’Donnell y David Collier, quienes esbozaron estas teorías,
en los años 80, acerca de los regímenes autoritarismos tecnoburocráticos.
En efecto, el populismo, en lo particular, es para algunos autores, una teoría
de análisis político, para otros, autores, es un tipo de modelo político
particular y peculiar sea el caso latinoamericano, el cual tiene sus orígenes
en los años 40, hoy es una tendencia generalizada a nivel global, hay políticos
populistas de izquierda y derecha, tienen en común una visión autoritaria del
ejercicio del poder político, el manejo de lo económico, la forma como
relacionar con la comunidad política en forma directa, sin la intermediación de
las organizaciones políticas y un fuerte liderazgo carismático.
Ahora bien, además, esta categoría de análisis y modelo de desarrollo
político tiene una serie de características: Tienen en común un fuerte
liderazgo carismático, busca crear y robustecer un orden socio-político
altamente movilizador desde el punto de vista social, conciliador entre las
políticas de acumulación y de distribución de los recursos estatales, que puede
llegar sea el caso a la ruptura de la coalicción populista, cuando esta se hace
insostenible por escasez de recursos o pésima administración de ellos. Entre
los neoliberales y de izquierda marxista, se pueden ubicar partidos de esta
identidad, dado que se dan en sociedades abiertas, pluralistas que producen
este tipo particular no sólo de discurso político, sino de acción política
concreta como se puede ver en los casos de los Países Bajos, Francia, Alemania,
España y más recientemente como fue la llegada al gobierno de una candidatura
que desde afuera con un discurso rupturista capto a la mayoría del electorado
republicano y lo llevó a la presidencia de los EE. UU, me refiero al caso de
Donald Trump, en una amplia coalicción con grandes sectores blancos desplazados
del cambio industrial-tecnológico, geográficamente situados en el centro-este
de los EE.UU, que desea fortalecer en esta contienda electoral. Otros casos
como Jair Bolsonaro, en Brasil.
Por otra parte, como afirma el historiador Jorge del Palacio “…El éxito
del populismo no se cifra solamente en su capacidad para ganar elecciones y
penetrar en las instituciones. Al contrario, el populismo también vence cuando
condiciona tanto la agenda política de un país, como la forma de hacer política
de los partidos tradicionales. Normaliza la personalización de la política, el
estado de movilización permanente, el decisionismo, los registros discursivos
hiperbólicos y la polarización ideológica. Porque, en el fondo, el populismo no
aspira sino a convertir la democracia en un espacio de deslegitimación política
del adversario.
Por eso tenemos muy pocos motivos para la alegría ante la progresiva
moralización de nuestra conversación política, donde ya sólo parece haber cabida
para los buenos y los malos sin tacha: los santos. Y por ese camino se ha
llegado al extremo irresponsable de normalizar un lenguaje maximalista, así
como a banalizar conceptos como el totalitarismo, el fascismo, el comunismo y
todo extremismo. El objetivo es parecer más democrático que el oponente ante la
opinión pública, aunque con ello se contribuya a la degradación de la
convivencia y las instituciones…” Aquí está el meollo de la situación y en eso
los populistas han sido exitosos los últimos años. Los populistas necesitan las
estructuras libres y plurales de la democracia para acceder, queda en un alto
grado de la institucionalización de estructuras políticas, judiciales,
económicas, culturales ser el canal de contención para su éxito y permanencia.
Es evidente que todas las sociedades deben velar por sus miembros más pobres y
maximizar la movilidad social, sin dejar de recompensar el emprendedorismo y
alentar a las personas para que se esfuercen en mejorar su suerte. Pero
concentrarse en esas políticas no resolverá el distanciamiento entre la gente y
los gobiernos que subyace al ascenso de los populistas, porque su causa raíz no
es la desigualdad, sino la sensación de pérdida de control. El populismo ha
tenido desde sus inicios entre sus principales enemigos la democracia
representativa, el pluralismo y el compromiso, en particular la mediación de
los partidos, los sindicatos y los órganos de representación frente a los que
éste erige la personalidad providencial como intérprete de los anhelos del pueblo
entendido como ente unitario y homogéneo. En el ámbito internacional el
adversario es sobre todo la complejidad de la diplomacia, de los organismos
internacionales y del derecho internacional y ya en el plano económico y
comercial, la globalización. Es por eso que últimamente asistimos con excesiva
frecuencia a la simplificación de los problemas y los conflictos
internacionales, de naturaleza complejos, con la lógica binaria de amigo y
enemigo, a la política de los hechos consumados y a la ley del más fuerte, sin
dar cabida a la transacción, al compromiso ni a los términos medios.
En suma, conjugar la labor del técnico con la del político es difícil, gobernar
es más intricado, complejo, es optar entre opciones, es saber que se quiere,
saber que se puede y que no se puede hacer, saber cuándo hay que hacerlo y
finalmente, cómo hay que hacerlo, y en sociedades posindustriales de carácter
democrático, es más complicado. El político debe tener iniciativa estratégica,
pero con un sentido de las proporciones. Y esa es la función del político con
vocación y de oficio en estos tiempos de globalización y auge del populismo
sobre todo en los últimos 10 años, ha puesto en juego un político de lenguaje
directo, simple y que interpreta, a los sectores desplazados de la
globalización. Y, entonces, se pone en acción en este tiempo de globalización,
el surgimiento de políticos populistas en tiempos de globalización, vaya
paradoja, con implicaciones geopolíticas.
La geopolítica, sin duda, está en auge en esta era de líderes autoritarios, en
pleno declive del multilateralismo y de la visión normativa de la escena global
que parecía afirmarse en los 90, pero que se ha puesto en cuestión a inicios de
este siglo, sobre todo a raíz de las dos grandes crisis bélicas de nuestro momento
histórico, la agresión de Rusia contra Ucrania y la guerra de Israel contra el
grupo terrorista Hamas. A ello se une una confusión discursiva que identifica
erróneamente las relaciones internacionales o la geoestrategia con la
geopolítica, una disciplina de pretendida naturaleza descriptiva, pero que
preconiza una visión muy concreta del mundo y donde no hay margen para valores
democráticos o derechos humanos. Como lo pregonan líderes como Erdogan, Trump,
Bolsonaro entre otros.
En ese sentido, una sociedad internacional globalizada en su faz o cara
política, como la actual es compleja por el tipo de relaciones que se dan entre
las diferentes dimensiones de la globalización y por otra parte, por la
sofisticación de las mismas en su definición, por su interdependencia, por los
múltiples factores de las nuevas relaciones espacio-tiempo, por el dominio
creciente de lo que es reflejo de la acción social, que mantiene la
incertidumbre sistemática tanto en el plano individual como en el colectivo, ya
que esto afecta de antemano las posibilidades de anticipar intereses,
necesidades y comportamientos y esto ha hecho posible el surgimiento de
políticos populistas, tanto de izquierda como de derecha.
Por tal razón, la consideramos efectivamente un proceso multidimensional
caracterizado por seis vertientes principales interrelacionadas: La militar,
económica con sus dos subdivisiones: la financiera y la comercial, la
comunicacional/cultural, la científica/tecnológica, la ecológica/ambiental y la
política y, en estos tiempos del auge del populismo en Europa, Asia y América y
sus implicaciones geopolíticas, la interrelación populismo, democracia y
globalización se refuerza aún más. Por cierto, la elección de Kamala Harris
podía ser un muro de contención al surgimiento de nuevos populismos de
izquierda o derecha en el hemisferio, en un enfoque novedoso geoestratégico de
las relaciones interamericanas en un proceso creciente de globalización que
influya para para esta tendencia de aparición de populismos y puede derivar en
teofascismo de izquierda o derecha. Vaya paradoja.
Reflexionemos. Dos hechos ciertos del ámbito económico que las redes sociales y los medios de comunicación silencian, con el propósito de seguir alimentando —nacional e internacionalmente— una matriz de opinión funesta acerca del futuro nacional, han tenido lugar:
1) La Organización de Países Exportadores de Petróleo (Opep) señala en 928.000 barriles diarios, la producción de crudo en Venezuela para el mes de julio. 2) El Banco Central de Venezuela (BCV) informó del 0,7% en la inflación para julio del presente año.
Nuestra economía es como un paciente afectado de una enfermedad compleja (MCU y demás formas de guerra difusa) que durante 7 años —paulatinamente— pasó de 100kg a 25Kg. La política económica ha contenido esta pérdida para estabilizar al paciente. A finales del 2021, pasamos de la estabilización al crecimiento donde progresivamente el paciente recobra masa corporal, hoy día con unos 40 kg. No obstante, aún falta por recuperar plenamente su peso original.
Frente a ello, una narrativa cínica y mal intencionada se ha venido promoviendo para banalizar las acciones económicas implementadas causando mucho daño en la sociedad. Otra dimensión de guerra se activó, golpean severamente la paz mental del venezolano. En razón de ello, nos parece vital promover la vocería económica a diferentes niveles para posicionar la verdad de Venezuela en el ámbito nacional e internacional.
Es imperativo en estos tiempos de “posverdad” promover —especialmente— en las redes sociales datos precisos del hecho económico, ello será clave, para combatir la mentira y el odio que aspira desdibujar la esperanza de todos los que apostamos por la recuperación y progreso del país.
Venezuela está reconstruyendo su economía bajo el asedio implacable del movimiento globalista, ello exige un método de trabajo eficiente de hacer mucho con poco. La política económica progresivamente ha venido arrojando resultados positivos que deben ser comunicados al país y al mundo.
Mientras redoblamos esfuerzos en recuperar y promover el desarrollo de los servicios básicos, en paralelo a una poderosa infraestructura física —como un requisito sine qua non— que permitiría integrar el territorio nacional con la región y el mundo de cara al Nuevo Orden Mundial.
Twenty-five years after the beginning of the first so-called China shock, when a surge in Chinese exports disrupted manufacturing and industrial sectors worldwide, Beijing has again begun to flood global markets with a wave of heavily subsidized manufactured goods and materials—including everything from metals and textiles to more cutting-edge products such as electric vehicles, lithium batteries, and semiconductors. In more economically advanced countries, this influx threatens to upend emerging technology sectors and derail post-pandemic plans to “de-risk” economies by shifting supply chains away from China. In the developing world, a new tsunami of cheap imports could disrupt plans for industrialization and modernization.
According to the theories of economics and trade that are prevalent in the West, Chinese leader Xi Jinping has little choice but to pull back: China’s economy has become dangerously imbalanced. In 2022, according to the World Bank, the country accounted for 30 percent of global manufacturing value added but only 13 percent of global consumption. But it is a mistake to presume that Xi and the Chinese Communist Party (CCP) think about the Chinese economy the same way Western economists do. The key to understanding Xi’s economic policies is to recognize that they are principally about power, not prosperity. He will almost certainly forge ahead toward concentrating the world’s industrial power within China, even at the risk of provoking a cataclysmic trade conflict with other countries.
The emergence of a shared challenge has created an opportunity for enhanced cooperation among the advanced industrial democracies of the West and less developed countries in the global South. Beijing will push back hard against any attempt at policy coordination, seeking to divide, isolate, and overwhelm those who try to stand in its way. But the problems posed by the intensification of Chinese mercantilism are now so great that they cannot be addressed in an enduring way by any one country. Nor can they be solved merely by applying the usual assortment of stopgap remedies.
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Only by banding together in a trade defense coalition—an idea I developed with an economist in Asia—can countries with market-based economies protect themselves against China’s predatory practices. Leading this effort will require the United States and its allies to set aside the post–Cold War dream of building a fully integrated, maximally efficient global economy. But rather than abandon the liberal principles that underpinned the free-trade vision, they must focus on constructing a core subsystem of countries that are genuinely committed to the concepts of openness, fairness, and reciprocity and are willing to defend and abide by them. This kind of coalition will be challenging to create, but the alternative is worse: a world in which democracies are dramatically divided and weakened as the Chinese party-state continues to privilege its interests and enhance its power at the expense of other nations—and the Chinese people.
SPEED DEMON
Over the past three decades, Beijing has adhered to a growth-target model that relied on net exports of manufactured goods and investments in infrastructure and real estate to drive economic growth and absorb China’s colossal national savings. The first flood of manufactured exports that the country unleashed into the global economy after joining the World Trade Organization in 2001 contributed to a loss of manufacturing capacity and jobs in other industrialized economies, especially that of the United States. At the time, these changes were not effectively resisted because they were widely seen as part of a mutually beneficial process of economic evolution: as older industries withered in the West, new ones would emerge to take their place. Western analysts expected that China would have to shed its statist, market-distorting policies to meet the commitments it made on entering the WTO. Democratic reforms, it was believed, would quickly follow China’s economic liberalization.
Needless to say, these expectations have not panned out. In the first decade of the twenty-first century, China sought to pursue more economically advanced nations up the value-added chain by continuing to use subsidies, market-access restrictions, currency manipulation, and other tools to expand its manufacturing capacity and win growing shares of global production in established industries such as steel and solar panels. Despite the initial success of this approach, CCP planners realized that they could not indefinitely sustain it without eventually swamping global markets, degrading domestic productivity, and generating dangerous financial bubbles. As early as 2007, Wen Jiabao, then the country’s premier, warned that China’s economy was becoming “unstable, unbalanced . . . and unsustainable.” Two years later, Beijing openly acknowledged that it had created overcapacity in six state-dominated heavy industries, including cement, steel, and wind turbines.
Yet even when export demand collapsed in the wake of the 2008–9 global financial crisis, Beijing doubled down on its familiar model, further diverting national savings into domestic infrastructure, building still more excess capacity in existing industries, driving down returns on investment, and ratcheting up debt. In 2015, Beijing unveiled its Made in China 2025 program, which aimed to capture growing shares of both the domestic and overseas markets for advanced products such as industrial robots and electric vehicles. According to an April 2024 South China Morning Post analysis based on government sources, this plan has already achieved 86 percent of its objectives.
This impressive burst of technological and industrial upgrading came at a steep cost. China far outspent its foreign rivals on public subsidies, relaxed its environmental regulations, and spurred provincial and private debt-fueled investment into priority sectors. The approach created a free-for-all of domestic industrial competition that resulted in vast overcapacity—and helped drive China’s total debt to over 300 percent of GDP. In 2021, Beijing did throttle lending to construction firms and property developers out of concern for the oversupply in those sectors. Bursting the real estate bubble may have been necessary, but doing so then contributed to a dramatic post-pandemic slump in consumer demand and economic confidence in China and underscored the central question of how to sustain growth in both the near and longer term. The answer that Xi’s government has settled on has now become clear: yet more investment in manufacturing and another big export push, with a particular emphasis on high-tech sectors.
TRADE SECRET
Faced with a new wave of Chinese exports, U.S. and European officials have accused Beijing of deliberately cultivating industrial overcapacity. Chinese media outlets deride such allegations as a cover for a strategically motivated effort to contain their country’s rising power. Xi has flatly stated that “there is no such thing” as Chinese “overcapacity.”
The acute sensitivity to the term “overcapacity” reveals something essential about China’s political economy. In contrast to their liberal Western counterparts, Xi and his colleagues are not concerned primarily with the pursuit of efficiency or the enhancement of aggregate national welfare for its own sake. Neither market-loving capitalists nor true-believing Marxists, they can best be understood as mercantilist Leninists whose top priority is to acquire and exercise political power. Their economic policies are designed to preserve the CCP’s dominance and control at home while boosting the country’s industrial and technological capacities to transform China into the world’s most productive, innovative, and powerful state. These priorities help illuminate both what Beijing is doing and what it refuses to do.
Most Western experts, and some of their Chinese colleagues, have long believed that the only acceptable substitute for domestic investment is increased consumption. According to World Bank figures, household consumption in 2022 accounted for only 37 percent of China’s GDP compared with 68 percent in the United States, and the economist Michael Pettis has estimated that China would have to reallocate as much as ten to 15 percent of its GDP toward consumption to sustain healthy growth. This could be accomplished through greater wealth transfers to households in the form of higher wages, improved health care, and retirement pensions.
Xi’s economic policies are principally about power, not prosperity.
But China will not take that tack, because shifting a substantial portion of the country’s wealth into the hands of ordinary citizens would empower them at the CCP’s expense. And redirecting resources toward consumption and services, as developed countries eventually do, could diminish China’s industrial prowess and relative power, leaving it less capable of undertaking a military buildup or an emergency expansion of arms production. Losing its position as the irreplaceable link in many global supply chains would also reduce China’s geopolitical leverage.
This is why, rather than committing to liberalizing reforms, Xi is relying on China’s so-called new productive forces to turbocharge his country’s already outsize manufacturing base. As it has in the past, Beijing is now deploying massive subsidies (estimated to be three to nine times the levels found in the countries of the Organization for Economic Cooperation and Development, depending on the industry) and a shrewd predatory pricing strategy. The goal is to achieve an unrivaled position in fields such as semiconductors and biotechnology before competitors can react, as well as in the three vanguard sectors in which it already has a commanding lead: solar technology, batteries, and electric vehicles. And China shows no sign of relinquishing its hold on the sectors it has long dominated, including mining, textiles, and shipbuilding. On the contrary, Chinese officials now boast that theirs is the only country that produces goods in every one of the UN’s trade categories.
In the near term, Xi is counting on a surge of exports, especially to developing countries, to revive China’s growth. Based on July 2024 estimates from Bloomberg, this approach might temporarily alleviate China’s economic woes, but only on the optimistic assumption that other countries do not resist it. Beijing’s aims, however, are not purely or even primarily economic. By flooding global markets, China aims to drive foreign competitors out of business and tighten its grip over what officials in Beijing describe as “chokepoints,” including lower-end semiconductors and critical minerals. In these officials’ view, boosting manufacturing is part of an urgent “whole nation” effort to achieve self-reliance and reduce China’s vulnerability to technological blockades.
Even as Xi seeks to enhance China’s leverage over other countries, he is working to diminish their leverage over China. In the longer run, Beijing is betting that breakthroughs in artificial intelligence, robotics, and other emerging technologies will increase productivity, fuel growth, and permit Chinese companies to dominate global markets for new products. By supercharging science and technology, China aims to leapfrog ahead of current generations of military and intelligence systems to surpass even the capabilities of the United States.
DANGER AHEAD
Should these plans succeed, China will be able to lock in enduring advantages, creating a perilous concentration of industrial power. Its manufacturing surplus—already approaching two percent of global GDP, a staggering figure—could balloon. The United States and its key allies would find themselves in a position of deepening dependence on China for goods essential to the manufacture of both commercial products and military systems.
The harm to other countries would extend well beyond those that are already industrialized. Beijing often claims that its economic development helps poorer nations, but Chinese firms are already feasting on demand that would otherwise be met by local manufacturers. The fact that China is trying to retain control of less advanced as well as advanced industrial sectors means that much of its gains will come at developing countries’ expense, closing off routes to industrialization and relegating them to exporting the raw materials to feed China’s manufacturing machine and then importing its finished products.
The first reaction of many economists, commentators, and government officials to China’s new export wave has been to try to persuade Beijing that it now has no choice but to reconfigure its economic strategy to rely more heavily on domestic demand. But such appeals are destined to fail because a wholesale rebalancing of China’s economy toward consumption would weaken the CCP’s power. In theory, Beijing could also diminish friction with other countries through a substantial exchange-rate appreciation, which would drive up the cost of China’s exports, drive down the cost of its imports, and reduce its trade surplus. But the CCP dismisses that option as a deflationary trap of the sort that it claims the United States sprung on Japan in 1985. That year, Washington pressured Tokyo to accept a drastic revaluation of its currency relative to the dollar, triggering an asset price bubble that eventually burst and ushered in a so-called lost decade of economic stagnation.
Other Western analysts, especially those in Europe, still cling to the hope that China’s schemes to subsidize overcapacity, the proximate cause of the current crisis, can be addressed through the WTO’s dispute resolution mechanisms. This approach has repeatedly failed, however, even when China was weaker and the trade organization was stronger. Donald Trump has promised that if he again wins the U.S. presidency in November, he will impose steep across-the-board tariffs on all Chinese imports, as well as lower tariffs on other countries, including American allies. But unilateral U.S. tariffs cannot solve the larger problems posed by Beijing’s distortionary trade and industrial policies. Building a dam solely around the American economy would reduce its competitiveness and deflect the impending flood of Chinese exports into other markets. The disputes between advanced democracies that would inevitably follow would merely create fresh opportunities for Beijing to play those countries off one another.
U.S. President Joe Biden’s administration has already begun to raise tariffs and use national security provisions in U.S. trade law to restrict certain Chinese imports such as electric vehicles. By carefully tailoring its restrictions to a limited set of products and sectors for which it can make a plausible environmental or national security argument, the administration is trying to avoid setting off another tit-for-tat trade war. Although some officials in Washington have emphasized the importance of coordinating with allies to respond to China’s export wave in a united way, they clearly hope to avoid taking concerted actions that could be seen as discriminatory toward China, violate the multilateral principles of the WTO, or further fragment the global economy. At this point, however, these are precisely the kinds of measures that are needed.
UNIFIED COMMAND
No country alone can forestall or contain the impending second China shock. The European Union’s competition czar, Margrethe Vestager, is one of the few world leaders to recognize this, openly acknowledging that China’s global trade surplus is a systemic problem that demands a systemic response. Anything less will yield what she aptly calls a “whack-a-mole” approach in which Beijing deflects complaints about particular industries and pursues endless dialogues to evade more serious pressure.
Avoiding this outcome will require the formation of a trade defense coalition modeled loosely on a collective security alliance. Its purpose would be to reduce its members’ dependence on China by encouraging the proliferation of productive capacity for a wide array of manufactured goods. As in the military domain, members would seek safety in numbers and through binding rules to reduce the risks of free-riding or defection. In democracies, joining the coalition would require formal legislation rather than executive orders, which can be overturned through a change of government. If key countries chose not to join, their markets would be swamped by underpriced imports from Chinese producers seeking a way through the coalition’s defensive armor, and possibly compel holdouts to reconsider. Although the coalition could grow, its inaugural members should include a core group of liberal democratic allies and an assortment of high-deficit industrializing countries that, regardless of regime type, share the objective of shielding their economies from Chinese mercantilism.
For such a coalition to be effective, the United States and the EU would need to take part, along with at least half the world’s 15 next-largest economies, excluding China—most likely, Australia, Canada, India, Japan, Mexico, South Korea, Turkey, and the United Kingdom. These states are already either close U.S. allies or strategically more aligned with the United States than with China. According to the International Monetary Fund, in 2022 these countries together accounted for 62 percent of global GDP and ran a collective deficit of $1 trillion with China and Hong Kong. Potential coalition members would also include other existing or aspiring members of the Organization for Economic Cooperation and Development, such as Argentina and Indonesia, as well as any other nations that seek to industrialize independently of China to safeguard their economic or military security.
Electric vehicle production in Wuhu, China, July 2024
China Daily / Reuters
The members of such a trade defense coalition could deploy a variety of tools to restrict access to their markets, including import quotas and regulatory measures such as bans imposed for the purpose of national security grounds or to protect industries endangered by unfairly priced imports. But the most important mechanism would be a system of import tariffs applied to specific product categories that are critical to national defense or essential to the functioning of modern economies and societies and are vulnerable to supply dominance by China. Most countries that would need to take part in the coalition have already developed such lists; these must be integrated.
It is critical that this coalition have a unified set of rules and target items; otherwise, trade circumvention or leakage would erode its effectiveness. The purpose of a tariff barrier would be genuinely protective: to buy time and create sufficient commercial incentives for new alternative suppliers to emerge both inside the coalition and beyond its perimeter. Tariffs shield existing producers from predatory pricing, but they might not be sufficient to induce new companies to enter markets. To encourage the latter, the coalition would also need to harmonize industrial policy tools, including members’ technology-sharing arrangements and capital, financial, environmental, and regulatory incentives, perhaps coordinating with aspiring manufacturers in other countries, as well.
Given the globalization of manufacturing, it will also be essential to devise a method for calculating the true origin of the value added to each product. Many of the world’s most important goods are now what the WTO defines as “complex products,” such as cellphones and vehicles, which cross at least two national borders before their final assembly. The economist Richard Baldwin has estimated that China now produces about 40 percent of the intermediate components incorporated in these goods, meaning that its actual dominance in many sectors is hidden.
Since the U.S.-Chinese trade war began in 2018, many Chinese firms have begun to offshore a fraction of their manufacturing processes to other countries to avoid the higher tariffs that would be imposed on their products if they were exported directly from China. To thwart such tactics and determine the appropriate tariffs on specific products, the trade defense coalition would need to create a much fuller supply chain accounting system. The higher the amount of Chinese-origin content in a final product that arrives at a coalition member’s borders, the higher the tariff should be. Such a system would have been impossible to implement a generation ago. But today’s information systems can track even the smallest of parts as they move through the production process.
DESTROY IT TO SAVE IT
The likely objections to this proposal are numerous. It cannot be denied that creating a defensive coalition would violate the WTO’s principle of nondiscrimination. Unfortunately, however, China has already warped and distorted the WTO’s principles and now uses the organization’s procedures to shield its own discriminatory practices from scrutiny and avoid compliance. The United States and its allies must not permanently abandon the WTO, but neither can they currently depend on it to protect their economies.
The creation of a trade defense coalition would also further fragment the global economy into at least partly separated trading blocs. But the alternative is not the renewal of a march toward a fully integrated, balanced global economy based on the principle of comparative advantage. Xi likes to present himself as the great defender of globalization. What he has in mind, however, is a very lopsided version of it, in which China protects its own market and uses subsidies to expand its already overgrown industrial base while other countries remain open, providing it with the markets, technology, resources, and capital it needs to grow even as their own industrial capacities erode and their dependence on China deepens.
Learning from China’s experience so as to better counter its policies need not mean that, through some perverse process of convergence, “we” will become more like “them.” A decade after Beijing unveiled its Made in China 2025 program, other industrialized countries are slowly grasping the reality that Chinese leaders indeed intend to make almost everything in China. Other major economies now have little choice but to adopt trade and industrial policies that mirror some of China’s own successful efforts. In addition to walling off infant or embattled industries, these policies may include offering subsidies, mandating locally made inputs, and requiring technology transfers from any Chinese company permitted to operate inside the coalition’s defensive barriers.
No country alone can forestall or contain the impending second China shock.
A trade defense coalition would not leave Beijing free to commercially dominate the global South. Nor would it compel developing nations to choose between China and the West. On the contrary, by promoting the broad diffusion of industrial capacity and know-how, a coalition would offer these countries a better deal than the extractive one they currently get from China. It would be in the interests of the coalition to cultivate alternative suppliers in a variety of nations, from Malaysia to Morocco. Everyone outside the coalition would be free to continue buying low-cost goods from China; if they incorporated targeted items into their exports, however, the coalition would levy appropriately weighted tariffs. That would pressure Chinese companies to add more value to products in other countries, permitting companies in those countries to manufacture more components and do more of the work. Meanwhile, multinational companies based in coalition countries would be incentivized to transfer skills and capacity to countries other than China, preferably friendly ones with market economies and a dedication to the rule of law.
Although penalizing China’s underpriced exports could slow the world’s shift toward renewable energy, environmental considerations must be appropriately weighed against security concerns. Aided by cheap electricity, much of it generated by coal-fired plants, China’s oversize solar power industry has already driven prices so low that foreign competitors have largely been eliminated from the market. This is not the case yet for wind turbines, however, or even batteries, for which the chemistries are evolving. As the world’s energy systems slowly tilt away from fossil-fuel-dependent grids and internal combustion engines and toward renewable energy technology and distributed storage, most industrialized nations will seek to control the manufacturing, installation, and operation of substantial portions of these critical networks.
Beijing will no doubt retaliate against the formation of a defensive coalition, whether by cutting imports from member countries or threatening to limit their access to the supply chains it dominates. But because the countries that would make up the coalition will continue to be the major source of global demand, they will not lack for leverage. Provided that they work together, a group of like-minded countries should have the scale, technology, and resources needed to resist Chinese pressure and sustain their own prosperity.
BETTER TOGETHER
Rather than simply accepting an outcome in which industrial and technological power inexorably gravitate toward China, this kind of trade defense coalition would shore up the position and protect the autonomy of the United States, as well as other advanced nations. It would also accelerate globalization in the truest sense by encouraging a wider dispersion of production, knowledge, and income. In the United States and other developed countries, however, this kind of coalition will be a tough political sell. Although it would generate good new jobs, its creation would likely spur inflation, and major multinational corporations would feel the pain of China’s retaliation. To ease the path, the coalition’s purview could be established incrementally, starting with just a few industries. This was the approach that ultimately led to the creation of the European Union, which began with a more modest 1951 agreement to form the European Coal and Steel Community.
Today, the automotive sector would be a logical place to start. Chinese planners recognized the promise of electric vehicles early on. But because auto industries provide millions of jobs and have direct links to manufacturing sectors critical to national defense, most major economies still want to retain them. Preserving them in the face of cheap Chinese imports will be impossible, however, without tariffs and incentives for alternative suppliers of batteries and components. These methods will be more effective if they are applied in a coordinated fashion. Cars and car parts produced under the policies of a trade defense coalition would likely be more expensive than those imported from China. But the data they collect would be more secure, and they would be built by better-paid workers in liberal, transparent economies. Consumers would have more opportunities to bypass Chinese brands and thereby avoid rewarding the CCP for its mercantilist policies.
Ultimately, the strongest argument in favor of a trade coalition is that it is vital for the security of advanced democracies. The world is already dangerously reliant on China for an astounding assortment of essential goods and intermediate components, as the COVID-19 pandemic laid bare. The war in Ukraine has driven home how central manufacturing capacity still is to modern warfare. It takes little imagination to foresee a future crisis or conflict in which China could inflict sudden and potentially paralyzing supply chain shocks on its adversaries. Democracies understand that they must pay a premium to preserve their freedom of action by at times increasing their defense budgets. They must also learn to take steps to defend their economies, even if these are costly.
Although Beijing will claim otherwise, a trade defense coalition need not hold China back or stifle its growth. Instead, it would prevent the country from exercising its self-proclaimed right to development in ways that deindustrialize the economies, limit the autonomy, and endanger the security of other countries, rich and poor alike. Ultimately, a trade coalition could even be good for China. Limiting Beijing’s ability to externalize its domestic economic imbalances and use other countries as outlets for its overproduction would increase the odds that the Chinese government will finally abandon its mercantilist model in favor of genuine, liberalizing reforms. Then, China could take its proper place in the open, integrated, and mutually beneficial global trading system that democratic countries envisioned when the Cold War ended three decades ago.
