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To find out more, read our updated Cookie policy, Privacy policy and Terms & Conditions (BUTTON) OK Project Syndicate - Back to home Project Syndicate Logo * Magazine * Log in * (BUTTON) Search * (BUTTON) Menu * Latest * Columnists * (BUTTON) Sections + Economics + Politics + Development + Sustainability + Culture + Innovation * (BUTTON) Topics + PS 25 + Trade Wars + Media + Value in the Age of AI + Africa + View all * On Point * Big Picture * (BUTTON) Multimedia + Videos + Podcasts (BUTTON) rodrik166_STRAFP via Getty Images_chinatradeshippingboat STR/AFP/Getty Images * (BUTTON) Comments 10 * (BUTTON) Add to Bookmarks (BUTTON) English * Arabic * Chinese * Russian * Facebook * Twitter * Whatsapp How to Get Past the US-China Trade War Nov 7, 2019 Dani Rodrik China and the United States, like all other countries, should be able to maintain their own economic model. But international trade rules should prohibit national governments from adopting “beggar-thy-neighbor” policies that provide domestic benefits only by imposing costs on trade partners. CAMBRIDGE – China’s economic rise poses significant political and strategic challenges to the existing global order. The emergence of a new superpower in Asia has inevitably produced geopolitical tensions that some have warned may eventually result in military conflict. Even absent war, the hardening of China’s political regime, amid credible allegations of myriad human-rights abuses, raises difficult questions for the West. 1. The Suleimani Assassination and US Strategic Incoherence haass109_Mark WilsonGetty Images_trumplookinglikeababy Mark Wilson/Getty Images The Suleimani Assassination and US Strategic Incoherence Richard N. Haass Following its targeted killing of Iran's second most powerful leader, the US could well find itself with no alternative but to devote more military resources to the Middle East, a path that could lead to additional Iranian provocations. And that shift would occur at a time of growing challenges to US interests elsewhere in the world. 41 (BUTTON) Add to Bookmarks What Does Suleimani’s Death Change? benami159_Pool Press Office of Iranian Supreme LeaderAnadolu AgencyGetty Images_soleimaniirangeneral Pool/Press Office of Iranian Supreme Leader/Anadolu Agency/Getty Images What Does Suleimani’s Death Change? Shlomo Ben-Ami The targeted killing by the United States of one of Iran's top military leaders represents a significant symbolic defeat for the Iranian regime, but it does not augur all-out war. After all, Iran and the US have already been at war for decades, and neither side has an interest in an uncontrolled military escalation now. 7 (BUTTON) Add to Bookmarks PS Commentators' Predictions for 2020 PS OnPoint op_swhatley12_Malte Mueller Getty Images_binocularspredictionslooking Malte Mueller/Getty Images PS Commentators' Predictions for 2020 PS editors asked commentators to anticipate the events and trends to watch in major countries and the world. 4 (BUTTON) Add to Bookmarks (prev) Previous (next) Next Then there is the economics. China has become the world’s top trader, and its increasingly sophisticated manufacturing exports dominate global markets. While China’s international economic role is unlikely to be insulated from political conflict, it is also inconceivable that the West will stop trading with China. But what kind of rules should apply to trade between countries with such different economic and political systems? I recently teamed up with Jeffrey Lehman, Vice Chancellor of New York University’s Shanghai campus, and Yao Yang, Dean of the National School of Development at Peking University, to convene a working group of economists and legal scholars that could devise some answers. Our working group recently issued a joint statement, with support from 34 additional scholars, including five Nobel laureate economists. China’s admission to the World Trade Organization in 2001, and the establishment of the WTO itself, was predicated on the implicit premise that national economies, including China’s, would converge to a broadly similar model, enabling significant (or “deep”) economic integration. China’s unorthodox economic regime – characterized by opaque government intervention, industrial policies, and a continuing role for state-owned enterprises (SOEs) alongside markets – has been very successful in spurring GDP growth and reducing poverty. But it makes deep economic integration with the West impossible. An alternative perspective gaining ground in the United States is that the American economy should decouple from the Chinese economy. This would entail high trade barriers to Chinese exports and severe restrictions on bilateral investment flows. Such an approach would further intensify and render permanent US President Donald Trump’s trade war. We propose a middle ground between convergence and decoupling. The key is that China and the US, like all other countries, should be able to maintain their own economic model. Trade and other policies aimed at safeguarding (or “protecting”) a country’s economic system should be presumed legitimate. What is not acceptable are policies that would impose one country’s rules on another (through trade wars or other pressure) or that provide domestic benefits only by imposing costs on trade partners. Subscribe now Bundle2020_web Subscribe now Subscribe today and get unlimited access to OnPoint, the Big Picture, the PS archive of more than 14,000 commentaries, and our annual magazine, for less than $2 a week. SUBSCRIBE Targeting the latter category, which economists call “beggar-thy-neighbor” (BTN) policies, is central to our approach. We argue that international trade rules should draw a bold red line around BTN policies and prohibit them. A typical example is trade restrictions that enable a country to exercise monopoly power globally, as China tried to do by restricting exports of rare earth minerals some years back. Another example, which may become increasingly relevant in digital technologies, is closure of domestic markets to foreign investors in order to obtain competitive scale benefits on world markets. A third example is persistently undervalued currencies that help sustain large macroeconomic imbalances (trade surpluses). Under this approach, many other policies that the US habitually complains about would not be considered objectionable. China’s industrial subsidies and SOEs, for example, would be considered a domestic matter. While they may hurt specific American firms and investors, such practices are not, in general, of a BTN nature: either they benefit the rest of the world in aggregate (as with subsidies), or their economic costs, where they exist, are borne primarily at home (as with state ownership). By the same token, the US would be free to adopt trade and investment policies that safeguard the integrity of its technological systems and protect communities adversely affected by imports. It could also insulate itself from any negative spillovers from Chinese policies, if it chose to do so, by imposing restrictions at the border. China must recognize that policy autonomy is a two-way street: other countries need it as much as China does. While our approach is stated in bilateral, US-China terms, it is easy to embed it in a multilateral framework – and even the WTO itself, with some creative legal maneuvering. One such approach is suggested by one of our working group members, Robert Staiger. The stark reality, however, is that progress on the multilateral front is unlikely without a prior agreement between the world’s two largest economies. Thus, we view our statement as an initial step in that direction. Like all international agreements, our proposed approach depends on the willingness of the parties to abide by the terms. While the concept of BTN may be clear to economists as an analytical matter, we are not so naive as to suppose that the US and China would quickly and easily agree in practice on what is and is not a BTN policy. Disputes about terms and definitions will persist. Even so, our hope is that a framework that sets out clear expectations, respects both countries’ economic sovereignty, guards against the worst trade abuses, and allows the bulk of the gains from trade to be reaped would create the incentives needed to build mutual trust over time. This approach leaves open the question of how the US and other Western countries should respond to China’s political repression or human rights abuses. That is not because these issues are unimportant, but because clear rules of conduct in economic relations must be established regardless of how even bigger conflicts are to be resolved. Without such a roadmap, it is not just the economic interests of China and the US that will suffer. The rest of the world will pay a high price as well. Featured 1. The Inequality Debate We Need The Inequality Debate We Need Jan 6, 2020 Kenneth Rogoff 2. Chinese Growth Really Can Be Faster Chinese Growth Really Can Be Faster Jan 6, 2020 Yu Yongding 3. Making Stakeholder Capitalism a Reality Making Stakeholder Capitalism a Reality Jan 6, 2020 Laura Tyson & Lenny Mendonca 4. When Climate Activism and Nationalism Collide When Climate Activism and Nationalism Collide Jan 6, 2020 Kemal Derviş Dani Rodrik Dani Rodrik Writing for PS since 1998 165 Commentaries (BUTTON) Follow Dani Rodrik, Professor of International Political Economy at Harvard University’s John F. Kennedy School of Government, is the author of Straight Talk on Trade: Ideas for a Sane World Economy. (prev) Previous (BUTTON) Cancel (next) Next (BUTTON) Close new comment has been posted. new comments have been posted. (BUTTON) Refresh? (BUTTON) Close 0 Comments on this paragraph, 10 in all 10 Comments on this article Before posting a comment, please confirm your account. To receive another confirmation email, please click here. * Arun Motianey Nov 10, 2019 I know Dani Rodrik means well but this article read like a desperate attempt to triangulate: to satisfy the US, China and also salvage some remnants of a rule-based system. I find these three incommensurable with the third option likely to be sacrificed. That means more conflict ahead, unfortunately. (BUTTON) Reply A new reply to this comment has been posted. (BUTTON) Load? * Joe Ryan Nov 9, 2019 It's understandable that Prof. Rodrik should try to avoid blame for appearing to support Pres. Trump's trade wars etc., and Prof. Rodrik's distancing himself from anti-globalism rhetoric is welcome in any case. It's also a constructive contribution on his part to bring to people's attention that multilateral frameworks are available to deal with concerns like those commonly aired regarding international economic policies of China's government. However, the lede in Prof. Rodrik's essay -- "China’s economic rise poses significant political and strategic challenges to the existing global order" -- isn't consistent with the facts. On the contrary, China appears to be integrating itself into the existing global order as well as others that one could name, and better than some. China's military rise poses challenges, in the South China Sea, for example, and the competition of Chinese firms poses economic challenges to other firms, Chinese and non-Chinese. But a vague claim that the existing global economic institutions are threatened by China is hardly justified. (BUTTON) Reply A new reply to this comment has been posted. (BUTTON) Load? * Prashant Kotak Nov 8, 2019 Is this proposal not merely kicking the can down the road, setting the scene for a much bigger blowup in a few years? No amount of soft peddling of China's 'opaqueness' alleviates the fact that China is a single party authoritarian state. Here's a thought experiment: suppose we go along with this 'parallel development models' scenario and allow Chinese state backed actors (tech or nuclear power stations or whatever) to sell into western infrastructure. So the west spends hundreds of billions. Then, because of some troublemakers in Hong Kong, China sends the tanks in. What is your response? Ignore the issue like the Khoshoggi murder? Or disengage at that point and pour hundreds of billions already spent down the drain? Or are you relying on, hoping, that China will democratise? (BUTTON) Reply + Art Chen Nov 9, 2019 We already forgotten Khoshoggi murder because we are allies with Saudi, which has even worse human rights than China, (BUTTON) Reply o Prashant Kotak Nov 9, 2019 It absolutely does - the Saudi regime is disgusting. But the Saudis, for all their attempts to export their hideous model, don't possess the heft to upend western liberal democracy. China has an implicit counter-offer of a model that very definitely does. Don't get me wrong - China, though nationalistic, is not inherently aggressive, as the USSR was. The risk, for example of nuclear conflict, is lower than with the USSR. But I'm not convinced they should be indulged either by letting them get on with horrors within their own sphere without consequences. And what other action can the free world take that would be at all effective, except refuse to do business with them? (BUTTON) Reply A new reply to this comment has been posted. (BUTTON) Load? A new reply to this comment has been posted. (BUTTON) Load? A new reply to this comment has been posted. (BUTTON) Load? * Steve Tjin Nov 8, 2019 I disagree with your view. As it stands, we see the accumulation of exorbitant capital and political power, with small segments of non-liberal societies (China, Russia, Saudi Arabia to name a few). That very power is used against Western liberal democracies in various ways. In the mean time, those systems are only sustainable by oppressing significant swaths of their societies, aided and abetted, in my view, by the very trade and finance relationships we engage in with oppressing, corrupt regimes. I do believe that the decoupling, not just between the US and China but broader, between liberal democratic societies and the rest, is the way to go as the current path has brought into stark perspective the irreconcilable nature of such relations with our core values. E.g. we would find the government's power as is the case in China unacceptable but we're willing to engage in trade relations that strengthen those very forces. We hail freedom of the press as one of the pillars of our system but when a Khashoggi is murdered, we all turn a blind eye because of defense spending and US posture. Surely there needs to be a term that really captures the notion of a geopolitical cognitive dissonance. (BUTTON) Reply + 龚志诚 ｔａｒｄｉｓＧｏｎｇ Nov 8, 2019 Is the ultimate goal of pursuing political freedom not to improve people's lives? In Iraq and Libya, these countries rely on external forces to achieve so-called political freedom, what can ordinary people's lives look like? On the contrary, in South Korea and Taiwan Province of China, political freedom will naturally be realized with economic development and the improvement of people's living standards. (BUTTON) Reply A new reply to this comment has been posted. (BUTTON) Load? A new reply to this comment has been posted. (BUTTON) Load? * Godfree Roberts Nov 7, 2019 "the hardening of China’s political regime, amid credible allegations of myriad human-rights abuses," There is no sign that China's socialist 'regime' has hardened any more than that America's capitalist regime has done so. Indeed, the Chinese trust and approve of theirs far more than we do ours. As to the unfounded allegations of human rights abuses, readers are advised to revisit the UN Declaration of Universal Human Rights where they will find that, of the 30 rights enumerated, China leads the US by 26-2, with two draws. (BUTTON) Reply + Steve Tjin Nov 8, 2019 Can you be more specific as to the "score" on the UN Declaration of Universal Human Rights by providing a link? (BUTTON) Reply A new reply to this comment has been posted. (BUTTON) Load? A new reply to this comment has been posted. (BUTTON) Load? (BUTTON) Close (BUTTON) New Comment * LinkedIn * (BUTTON) Bookmark * (BUTTON) Email * Print * (BUTTON) Contact Us (BUTTON) 10 * Facebook * Twitter * Whatsapp * (BUTTON) Show More (BUTTON) Show More (BUTTON) Contact Us https://prosyn.org/4yUC9An; New Comment It appears that you have not yet updated your first and last name. If you would like to update your name, please do so here. 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Making Stakeholder Capitalism a Reality tyson88_ExperienceInteriorsGettyImages_businesstablenewyork ExperienceInteriors/Getty Images Making Stakeholder Capitalism a Reality Laura Tyson & Lenny Mendonca offer reasons to believe that major corporations are serious about moving to a new governance model. 1 (BUTTON) Add to Bookmarks 2. When Climate Activism and Nationalism Collide dervis96_Chip SomodevillaGetty Images_climateprotestwhitehouse Chip Somodevilla/Getty Images When Climate Activism and Nationalism Collide Kemal Derviş says the fight against global warming may generate the dominant political divide of the 2020s. 0 (BUTTON) Add to Bookmarks 3. Chinese Growth Really Can Be Faster yu52_WANG ZHAOAFP via Getty Images_chinastockeconomymarket Wang Zhao/AFP via Getty Images Chinese Growth Really Can Be Faster Yu Yongding defends his argument that the economy has the space – and an urgent need – for fiscal and monetary stimulus. 0 (BUTTON) Add to Bookmarks 4. Was Killing Suleimani Justified? singer179_ATTA KENAREAFP via Getty Images_iranprotestsoleimani Atta Kenare/AFP via Getty Images Was Killing Suleimani Justified? Peter Singer At a press conference following the US drone strike that killed Iran's top military commander and several others, a senior State Department official blurted out: “Jesus, do we have to explain why we do these things?” In fact, the international rule of law depends on it. 6 (BUTTON) Add to Bookmarks 5. The Inequality Debate We Need rogoff189_Alvaro FuenteNurPhoto via Getty Images_coalmineworker Alvaro Fuente/NurPhoto via Getty Images The Inequality Debate We Need Kenneth Rogoff says that preventing a climate disaster requires addressing disparities in countries' access to energy. 11 (BUTTON) Add to Bookmarks 6. Trump’s Blind March to War salehiisfahani5_Joe RaedleGetty Images_trumpprayingchristiancoalition Joe Raedle/Getty Images Trump’s Blind March to War Djavad Salehi-Isfahani highlights the dangerously flawed US assumptions underlying the latest escalation of the conflict with Iran. 2 (BUTTON) Add to Bookmarks 7. The Assassin’s False Creed khrushcheva120_BRENDAN SMIALOWSKIAFP via Getty Images_trumpshadowstormsilhouette Brendan Smialowski/AFP via Getty Images The Assassin’s False Creed Nina L. Khrushcheva points out that those who order or carry out targeted killings seldom achieve their intended goals. 1 (BUTTON) Add to Bookmarks 8. The Post-Suleimani View from Iran milani3_IRANIAN SUPREME LEADER PRESS OFFICE HANDOUTAnadolu Agency via Getty Images_irankhamanei Iranian Supreme Leader Press Office Handout/Anadolu Agency via Getty Images The Post-Suleimani View from Iran Abbas Milani examines the Islamic Republic's strategic thinking following the assassination of its top general. 5 (BUTTON) Add to Bookmarks * On Point * Sections * Big Picture * Videos * Podcasts * Columnists * Archive Get our weekly newsletters ____________________ Sign up * Subscribe * Magazines * The PS Store * Donate * About Us * Careers * Contact * FAQ * Syndication * Submission policy * Facebook * Twitter * Youtube * LinkedIn * G+ © Project Syndicate - 2020 | Privacy Policy | Terms & Conditions | Cookie Policy Powered by Flowli * Sections + Economics + Politics + Development + Sustainability + Culture + Innovation * Big Picture + PS 25 + Trade Wars + Media + Value in the Age of AI + Africa + Education + Solutions for Sustainable Development * More + On Point + The Big Picture + Latest + Most Popular Multimedia + Videos + Podcasts * Project Syndicate + Columnists + About Us + Syndication + Member Publications + Twitter + Facebook + Google+ + LinkedIn Support us + Subscribe + Magazines + The PS Store + Donate ____________________ Submit (BUTTON) ✕ Log in/Register Please log in or register to continue. 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