HONG KONG — I’ve been in Tokyo and Hong Kong this week, and if I were to distill what echoed in all my conversations, it would sound something like this:
From Chinese business and government types, some real anxiety — “Can you please tell me what is President Donald Trump’s bottom line in this trade war? Is this about rebalancing trade or containing China’s rise?” — combined with some real bravado — “You realize that you Americans are too late? We’re too big to be pushed around anymore. You should have done this a decade ago.”
From the Japanese, it was gratitude — “Thank God for Donald Trump. Finally we have a U.S. president who understands what a threat China is!” — combined with real anxiety — “Please, please be careful. Don’t go too far with Beijing and break the global trading system.”
And from a smart European consultant, it was bewilderment — “Boy did the Chinese have a failure of intelligence. They had no clue just how much both Democrats and Republicans, and Europeans, all want to see Trump hammer China in these trade talks. But please, please don’t start a cold war with China that will force us to choose sides.”
And from me to both my Chinese and Japanese interlocutors: I’m glad Trump is confronting China on its market access barriers. Those are the real issue — not the bilateral trade imbalance. This is long overdue. But trade is not a zero-sum game. China can thrive and rise, and we can, too, at the same time. That’s what’s happened for the past 40 years. But we’d be even better off if China offered the kind of easy access to its market for U.S. manufacturers that it enjoys in America. It’s time to recalibrate U.S.-China economic ties before it really is too late.
That’s why this may be as consequential a moment as America’s decision to contain the Soviet Union 70 years ago. We don’t want to be containing China. But to avoid going down that path, both countries have to be smart and honest about how we got here: China has to be a lot more humble about how its economy got so big so fast, and Trump has to be a lot more sophisticated about how America got so strong for so long.
What do I mean? China’s formula for success had three pillars. The first was a lot of hard work; delayed gratification; high savings; smart investments in infrastructure, education and research; and a Darwinian system of capitalism. In China’s “jungle capitalism,” 30 companies in the same business emerge and compete to see which becomes the alpha male and wins the government’s backing to go global. This system has produced high levels of innovation — Alibaba, Tencent, DJI — despite a censored internet, lack of a free press and an authoritarian government.
The second pillar was a system of cheating on World Trade Organization rules; the forced transfers of technology; the stealing of the intellectual property of others; nonreciprocal trade rules; and massive government support for the winners of both its Darwinian competitions and inefficient state-owned industries.
The third pillar — never acknowledged by China — was a stable global trading system built by U.S. statesmen and sustained by the U.S. Navy. It’s been the U.S. Navy in the Pacific that has assured China’s trading partners there that China’s economic domination wouldn’t result in China’s geopolitical domination over them — and therefore made them open to massive trade and investment from China.
America’s formula for success, which dates from our founding, also had multiple components: We always educated our children to take advantage of the prevailing technology of the day.
When it was the cotton gin that meant universal primary education; when it was the factory, it meant universal secondary education; once it was the computer, some form of universal postsecondary education was required; and now that it is becoming big data and artificial intelligence, it’s going to be lifelong learning.
We also always aspired to have the best infrastructure (roads, ports, airports and telecom), the most government-funded basic research to push out the frontiers of science so our companies could innovate further and faster, the best rules and regulations to incentivize risk-taking and prevent recklessness, and the most open immigration system to attract high-energy, low-skilled workers and high-I.Q. risk-takers.
Finally, we always stood for universal values of freedom and human rights, always paid extra to stabilize the global system from which we were the biggest beneficiary, and therefore always had enduring allies — not just intimidated neighbors and customers like China does.
And all our strengths were enabled by a democratic system and political class that at key moments always found ways to compromise to renew the elements of our growth model. We had not yet become what we are today, what Francis Fukuyama calls a “vetocracy” — where the two national political parties often just veto each other, making it impossible to reinvest in our formula for success.
This trade war can end well only if China is honest about all the pillars of its formula for success and if Trump is honest about all of ours. We can get tons of trade concessions from China, but if we get away from the formula that actually made us great, we’re not going to enjoy sustainable, inclusive growth.
So when I watch this spiraling trade war and listen to both sides, I want to tell the Chinese: You didn’t get here with just hard work; the barriers you put up were not an entitlement that you’re allowed to keep forever, and the global economic system you grew into was not one you built. Your biggest customer and rival — American — did that.
And to Trump I want to say: America became great with a formula that every great American president refreshed and reinvested in. And you’re not doing that. You’re actually undermining and neglecting some of its key elements — immigration, allies, rules and regulations.
In sum, I worry that America has become so focused on who the Chinese are and what they’re trying to become that we’ve lost sight of who we are and how we got here. That’s the biggest threat to our economy and our future.
Thomas Friedman is a columnist for The New York Times.