President Trump often presents China as a threat to America and its workers. Powerful Democrats like Senate Minority Leader Chuck Schumer (D-N.Y.) agree with him. But this week, former vice president and 2020 Democratic presidential contender Joe Biden took an opposing tack: "China is going to eat our lunch? Come on, man," he declared at a campaign stop. Biden listed off China's myriad challenges, from geopolitics to resources to internal corruption, before insisting, "They're not bad folks, folks. But guess what? They're not competition for us." Which is actually a theme Biden has returned to repeatedly over his career.
This assessment did not impress observers on either side of the aisle. Biden's comments "will not age well," Sen. Mitt Romney (R-Utah) remarked. Bernie Sanders, another Democrat angling for the 2020 nomination, said "It's wrong to pretend that China isn't one of our major economic competitors."
But who's right?
In truth, they all are. This is what makes clear-headed discussions about China so devilishly hard to have in U.S. politics: The country can be friend and foe to America, in different overlapping ways, all at the same time.
Let's start with the economics. It's true that trade with China has cost blue-collar Americans somewhere between one million and three million jobs since 2000. (Sanders cited the high-end estimate in his response to Biden.) But it's important to put this statistic in its proper context.
Fundamentally, the problem of Chinese workers being cheaper than American workers is no different than Texas workers being cheaper than California workers. But while talk of economic "competition" between states is not unheard of in U.S. politics, it's generally not viewed as a major problem. Partially, that's because of cultural and national affinities. Texans and Californians share an overarching identity as Americans, while the Chinese are a foreign "other," which makes it easier to tag them as adversaries. The more concrete reason is that the U.S. federal government spends gobs of money every year smoothing out the differences between state economies, and using fiscal and monetary policy to manage aggregate demand (sometimes well, sometimes poorly) at the national level. Nothing equivalent happens for economic activity between countries. No one is out there making sure there's enough global demand to provide all the workers in the world with good paying jobs.
Unfortunately, America and other western countries have pushed a global trade order that actively curtails that demand. They've emphasized austerity, public spending cuts, and tight money. And they've pushed a series of free-trade rules that often treat domestic industrial policy, domestic subsidies, and other attempts by a government to help its own workers prosper, as "cheating." As a result, countries are stuck in a zero-sum competition over how much of the world’s inadequate demand they can capture for their own workers.
China's been more adept at playing this game than most: It has used various policies to chronically undervalue its own currency relative to the U.S. dollar, making its own exports less expensive, and siphoning off American demand to fuel Chinese jobs.
At the same time, the country is drastically unequal and becoming more so, and it's ruled by an authoritarian government whose political elites are often also China's business elites. To drive its domestic growth, the Chinese government tends to rely on credit provision via its state-owned banks, as opposed to more direct public investment by the government, or expansions of its welfare state to bulk up Chinese citizens' own ability to consume.
Meanwhile, the Trump administration's trade war with China has become largely fixated on ending Chinese acquisitions of U.S. technology and intellectual property, and curtailing China's subsidies to its own industries. Rebalancing the two national currencies has largely fallen off the radar. As a result, if Trump's trade war is successful, it will certainly increase the profit margins of U.S. corporations, and fatten the pocketbooks of shareholders. But it will likely do little to lift American jobs and wages.
As it turns out, Chinese elites and American elites are actually failing both countries’ workers in rather similar ways.
Now, what of national security? No doubt about it, China's government is hostile to genuine democracy and to many of the individual liberties Americans value.
Yet China does not appear to be ideologically expansionist like the Soviet Union, for example. What its one-party government seems primarily concerned with is its own preservation, and it recognizes that preservation rests on maintaining China's internal growth and rising prosperity. Now that the country's state-run capitalist model is coming under increasing strain, China needs access to global markets more than ever. Projects like the Belt and Road Initiative, for example, are not plots for world domination, but efforts to lay the foundation for its own future stability.
The thing is, even this sort of straightforward economic cooperation between China and other countries requires a measure of ideological affinity — so China must still defend and promote its own values and political nature against the alternative framework of the West.
If the global economy ever really got back on its feet, China's influence might wane. Even though it's still far poorer than the U.S. on a per person basis, it still has over a billion people. And in a world still starved for demand, smaller countries' self-interest often lies in playing ball with an economy as big as China's. America could counter this influence, if we were willing to embrace New Deal-style deficit spending at home and deep reforms to the international trade order abroad, but for now, that doesn't seem to be in the cards.
At bottom, the problem is that there's no monolithic thing called "China," just as there is no monolithic thing called "America." There are workers and elites and everyone in between, all vying for their interest within each country as well as on the global stage. Sanders often presents his presidential campaign as an affair of the people against the powerful. Recently, he's articulated how to extend that frame to foreign policy. It would behoove him — and anyone, really — to apply it to international trade as well.
Painting China as an adversary, as Trump and others do, obscures the fact that the Chinese people suffer from the status quo for many of the same reasons that working-class Americans do. Meanwhile, dismissing China's threat, as Biden did, paints over the deep needs for reform: both within our countries' domestic economies, and in the international trade system.