Global Times Interview: Implementing unilateral economic rules will ultimately harm the US itself

Editor’s Note (Global Times):

The US is capable of accurately understanding and engaging with China, its policies can be immune to the influences of extreme hawks and China-US relations can develop on a stable and healthy track – these are the shared aspirations of rational individuals from both countries regarding this most important bilateral relationship in the world. In the “Wisdom on China&US” series, the Global Times gathers the opinions of rational individuals from both the US and China to provide their perspectives on objectively viewing China and the right way for China and the US to coexist. In the second article of the series, Global Times (GT) reporter Qian Jiayin talked with Sourabh Gupta (Gupta), a senior fellow at the Washington-based Institute for China-America Studies.

GT: During a recent phone talk with then US president-elect Donald Trump, Chinese President Xi Jinping emphasized that China attaches great importance to interaction with the US, hopes that China-US ties would have a good start in the new US presidential term and stands ready to push China-US relations to make greater progress from a new starting point. What signals and goodwill do you think this conveys from the Chinese side, and how can China and the US work together to create a new chapter in their relationship?

Gupta: Even during these difficult past few years, China has always displayed the willingness required to reframe ties and in principle expand the pie of cooperation with the US. That said, for ties to continue on the trajectory they have been on, it will require stability and predictability from the US’ end. And the overarching framing of the bilateral relationship must become less negative. President Trump himself is personally well-disposed toward China and knows that important political accomplishments can be achieved with Chinese cooperation. 

The signal of goodwill extended by President Xi and reciprocated by President Trump on making the world a more peaceful and safer place in cooperation with China is nevertheless worth cherishing. Hopefully, these good intentions will lead to the steady management of ties and the constructive resolution of differences.

GT: Some scholars believe the Biden administration missed an opportunity to advance China-US relations. Do you agree? During the Trump administration, where do opportunities lie for improving relations between China and the US, and how should they be seized?

Gupta: The views of the US’ foreign policy establishment on China range from a grudging acceptance of coexistence to a deep-rooted sense of outright zero-sum hostility. There is no mainstream constituency for constructive engagement. It is important to note, however, that just because the era of strategic engagement has come to an unceremonious close, it does not mean that the two sides must succumb to an inexorable and deadly rivalry. 

A “new cold war” is not inevitable – although a palpable cold war-style, zero-sum mentality is settling into the competition between the two countries to dominate the high-technology and advanced manufacturing industries of the future. That said, an intermediate strategic equilibrium based on peaceful coexistence and the constructive management of differences is still realizable in overall China-US relations, given the consequential nature of their relationship and its importance to global affairs. But the establishment of this equilibrium will require delicate and skillful diplomacy.

GT: Reports indicate that US importers rush in goods from China as tariff threat looms. How do you interpret this phenomenon? If the US continues to impose high tariffs on Chinese imports, what impact will this have on the domestic economy and consumers? 

Gupta: It is true that the cost of high tariffs will fundamentally be paid by US consumers. However, despite the pain felt by individual Chinese exporters, I would argue that the US’ trade war has been a backhanded gift to Beijing. 

First, China’s overall market share of global goods exports has increased, even as its share of US imports has slipped. The decrease in Chinese exports to the US has simply been redirected elsewhere. Second, while there has been a relocation and diversification of production outside China to bypass the tariffs, this diversification is limited and shallow. Final assembly of items in countries like Vietnam and Mexico still continue to depend on China-sourced intermediate inputs. This “lengthening” of supply chains runs counter to the logic of supply chain resilience, which was the supposed reason – or, rather, excuse – to “de-risk” the dependence on China. The US’ recent and future tariffs will come to be seen in time as a blessing in disguise, equipping Chinese firms to internationalize their supply chain operations and obtain valuable “learning by doing” experience along the way.

GT: Some analysts believe that the US is in a race with itself to see which party can deglobalize faster, claiming that the country is in favor of pulling up the global drawbridge. How do you view this perspective? Will the current US tariff barriers and protectionist policies result in a decline in the US’ position within the global trade system? What are the long-term consequences of such policies for the global economy? 

Gupta: US tariff policy has turbocharged calls for protectionism within the US body politic and dislodged the long-held trade policy consensus within the Beltway from its pro-liberalization moorings. At a time when most major economies continue to liberalize their trade policy frameworks, the US’ economic nationalism has accentuated its relative isolation within the multilateral trading system. Today, every major economy, other than the US, prefers to deepen its trade ties and resolve its trade policy differences within the framework of trade multilateralism and the four corners of treaty law. Washington’s attempt to layer a unilateral set of rules over and above the WTO system and, in effect, jettison the Most Favored Nation status in its dealings with China has found no support, even among the club of advanced economies – let alone within the larger membership of the WTO. The fact that the US would so casually consider surrendering the multilateral trade system that it conceived and constructed 75 years ago is, in itself, depressing. 

Be that as it may, the race to the top that former US trade representative Robert Zoellick had challenged his advanced economy peers to pursue two decades ago, through his strategy of “competitive liberalization,” has long since passed. A new trade policy race to the bottom has been inaugurated with the two parties vying to outdo each other in terms of competitive populism. This will undoubtedly have a negative impact on the global economy over the medium term. However, so long as the other major economic areas of the world remain committed to the principles and rules of the multilateral trading order and do not succumb to competing bloc-building approaches, the greatest negative impact at the end of the day will be felt by the US itself.

GT: In his farewell speech, former US president Joe Biden stated that “China will never surpass” the US. However, China has consistently emphasized that surpassing the US has never been its goal. Why has the US long misunderstood China’s intentions? 

Gupta: With a population size that is four times that of the US and a growth rate typically two to three times that of the US, many observers believe it is a mathematical certainty that the Chinese economy will eventually surpass the US’. 

Adverse movements in exchange rates can only delay the inevitable for so long. Ultimately, however, as the US is set to be overtaken at the economic stakes by a non-Western country for the first time in the post-industrial revolution era, the entrenched mentality of denial – that China will never surpass the US – will likely persist for quite some time.

A lightly edited version of the original article was published by Global Times on January 26, 2025.