The Global Economic Playing Field

Why China is winning and why it will continue to win

In the third debate for the democratic nomination for President of the United States, there was one notable point in which democratic candidates actually agreed with the president. Most democratic candidates (9 of the 10) agreed that Trump’s tariff on China will remain, or at least will not immediately be lifted if the government changes in 2020.

As the data on the left shows, Americans have increasingly come to view China as ‘unfavourable’. Its not just the public, one in five companies, many of whom donate to political campaigns, say that China has stolen their intellectual property within the last year. This has made it politically advantageous for candidates to endorse or rather not renounce the idea of tariffs as a way to counter China’s actions with respect to intellectual property and global surveillance.

So what now? Trump (by extension the republicans) and the Democrats agree on China — specifically that it is a threat to American and global geo-politics. Why then is the title of the article, “The global economic playing field: Why China is winning and why it will continue to win”.

Democracy has increasingly become a popularity contest, where the most ‘likeable’ or in the case of the 2016 election the least non-likeable candidate wins. This brings with it a set of issue but for the purpose of this article, lets focus on one — temporary downturns.

Bad news is seldom accepted in a democracy. To win, a candidate always has to present themselves as having a solution that causes no side effects. Most solutions are presented as a be all end all proposition where no unintended consequences are discussed. Increase there is even a lack of respect by both political candidates and voters to the opposing side. This has increased the incentives for candidates to lie or more importantly omit the truth in order to win. The political pundits and news media have exacerbate this problem. By covering politics more like sport and reality TV drama they have, over time, forced issues to be boiled down into simple catch phrases. This has simplified politics, which should be about ideas and policy, into a publicity campaign that mobilizes a base of supports and rallies them around buzz words and chants.

In this environment it is tough to sway constituents to endure hardship in order to gain economic advantage in the future. Trump is certainly not an effective or trusted communicator to continue to enjoy the low 40% approval rating he has while voters start loose jobs. The government could artificially keep the economy a float by providing subsidies and pressuring the fed to cut interest rates. However, this is simply not sustainable. The Democrats who support the tariff as a tool to pressure China on intellectual property and global security must realize this.

China does not face the ‘hurdle’ of public opinion as the US does. China does not even have the problem of future political uncertainty, Xi Jining is effectively the leader of China for the foreseeable future. Hence China can play this negotiation by a different set of rules. This allows China to simply run the clock out on the current US president’s term. If the next US president continues to put pressure on China, it can either provide a small concession or retaliate with more tariffs and other geopolitical pressures. With no jeopardy to political power, China can afford to make moves the US simply can not.

One way to counter China effectively is to have a united group of nations take a stand against the unfair Chinese economic practices. This has two advantages. First, a united group of nations provides a strong political and economic check against china. Secondly, it forces china to respond as it cannot simply ‘wait out’ a change in government.

The trump administration has so far failed to convince the European Union to support the US decisions regarding tariffs or on Huawei. Since Huawei is already a part of the 4G network in the EU, the block has preferred to continue its relationship with Huawei, which can offer cheap 5G. However England, France and Germany have taken some steps in order to tighten security against data misuse.

The next democratic nominee must offer a strategy to counter China that trump cannot, a united west against China. By effectively avoiding the twitter politics and spontaneous outbursts of Trump, a more judicious and poised leader can create a geopolitical framework that can finally challenge china’s unfair economic practices.

However, communication to the public is key. The candidates have to take a stand and provide the public with the right information and economic security to ensure that there continues to be an economic balance where all nations play by the same rule book. Avoiding or sugar coating the issue or reaching a shallow deal will result in more divide and animosity within communities which continue to loose jobs and economic power to China. This creates an opportunity for a person to use the chaos of political discourse to win power under false pretenses. More than ever it is the responsibility of citizens to hold their leader to a standard that brings out the best candidates not individuals that simply use catch phrases or buzz words to attract voters attentions.

“Every nation gets the government it deserves.” — Joseph de Maistre

The author would like to credit Omar Marai (another student at the University of waterloo) with editing this article.

I write on politics, economics, data science and history; all views are my own.

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